Risks and uncertainties

The Board of Directors decided in 2009 to upgrade its corporate governance system by introducing a pro-active risk management system that 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, guided by the awareness that the assumption of risk is a fundamental part of business management. 1.

The Pirelli Risk Model systematically assesses two categories of risks: strategic risks and cross business risks. Strategic risks 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 (i.e. financial risks, the risks connected with typical business processes and human resource/organisation risks). Cross business risks are instead the ones that might impact operating activities regardless of the context in which the Group operates. This category includes business interruption risks and information system risks.

1Reference is made to the Corporate Governance area for details on the new risk management system.