Approach
The new model introduced by Pirelli is a proactive one, promoting the adoption of decisions and tools that avoid or at least mitigate and in any case "manage" risks, where the enterprise is most exposed to them.
The new model is based on a specific methodological approach:
- Value Driven - risks are qualified as more significant and therefore subjected to analysis in relation to their capacity to affect achievement of the Group's strategic goals set forth in its Strategic Plan or affect "critical" company assets (referred to as Key Value Drivers).
- Top-Down – the Company's Top Management identify major risk areas and those events that may impact the business most seriously.
- Quantitative – the model is based on the accurate measurement of risk impacts on expected economic and financial results.
| Risk Model | Risk Analysis | Risk Management |
Two major risk areas were identified:
Strategic risks, which are closely tied to the group'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.
Cross business risks, which can always affect operating activities regardless of current strategies. This category includes business interruption risks, information system risks and compliance risks.
Once the Risk Model was defined and general risk areas identified, the Risk Management Committee went on to pinpoint those areas that are most important for the achievement of the Industrial Plan targets and the implementation of the strategic lines, in other words those risk areas that directly affect Key Value Drivers. Those areas then became the subject of the Risk Analysis phase.
As for cross-business risks related to Business Interruption and Information Technology, the manufacturing sites most relevant to the Company's growth strategies were identified, along with the information systems supporting core processes.