• Strategic risks area
  • Transversal risks area
  • Steady rise in raw material costs
  • The Pirelli Group operates in countries such as Venezuela, Argentina, Brazil, Turkey, China, Egypt

The current macroeconomic situation, financial market volatility, complex management processes and continuous legislative and regulatory evolution force successful businesses to renew their ability to protect and maximise tangible and intangible sources of value that characterise their own business model. Assessing and preventing risks that might compromise the Group’s values and objectives have always been an integral part of Pirelli’s distinctive spirit of innovation and professional excellence. For these reasons, the Board of Directors decided in 2009 to upgrade its corporate governance system by introducing a pro-active risk management system. It uses a systematic and organised process of identifying, analysing and assessing risk-prone areas that could compromise the attainment of strategic objectives, provides the Board of Directors and top management with decision-making tools so that they can anticipate and manage the effects of these risks and, more in general, “govern” them. Strategic objectives are not only economic but also social and environmental, reflecting full integration of the sustainability system in corporate development plans.

Risk Management office is independent of business and Internal Audit

Focus on key value drivers, over and above processes

The chosen Model is based on a precise methodological approach that is: (i) value driven, insofar as the most significant risks are identified according to their capacity to prejudice attainment of the Group targets defined in the Strategic Plan, or impair “critical” corporate assets (“Key Value Drivers”); (ii) top-down, insofar as top management takes the lead in identifying priority risk areas and events having the greatest impact on the business; (iii) quantitative, i.e. based on exact measurement of the impact of risks on forecast operating and financial results.

Central role played by the board of directors and top management

The risk management system is illustrated as follows:

The risk management system