• Risk management office is independent of business and Internal Audit
  • Central role played by the board of directors and top management
  • The chosen Model is based on a precise methodological approach that is value driven
  • Focus on key value drivers, over and above processes

The principal areas of risk to which the company might be exposed are illustrated in detail in the section Risks and uncertainties within the Directors’ report on Operations in Volume 1, to which the reader is referred for detailed discussion of these issues.

A summary of these risks and uncertainties is provided as follows:

  • Strategic risks, which are closely tied to Pirelli’s objectives and consequent strategic choices. This category includes the exogenous risks stemming from evolution in the external context where the Group operates and the risks stemming from internal factors, such as financial risks, the risks connected with typical business processes and human resource/organisation risks.

The most significant risk factors in this area include increased competition in the markets where Pirelli operates, especially Europe and Latin America, and the steady rise in raw material costs (especially natural rubber). These factors might partially impair overall profitability, to the extent that the Group is unable to modify the commercial price/mix component and the internal cost efficiency component.
The Pirelli Group operates in countries such as Venezuela, Argentina, Brazil, Turkey, China, Egypt, where the general political and economic context and tax systems might prove unstable in future.

  • General risks: regardless of implemented strategies, Group operating activities rely increasingly on the proper, uninterrupted functioning of information systems and network infrastructure in support of business processes. The complexity of the information system environment used, the distribution of activities worldwide and links between them may increase the level of risks connected with information and communication technology. The global scale of Group operations exposes it to a plethora of risks (stemming from natural events, malicious acts, malfunction of auxiliary plants or interruption in the supply of utilities) that might even cause an interruption in business activities for an indefinite period of time, consequently impacting its operating and financial results. In 2010 the assessment of ten information systems critical to the Group and of five production sites was completed. Risk mitigation activities were undertaken on the ten information systems and operating continuation plans were prepared for the production sites.