Eni’s top risks portfolio consists of 20 risks classified in:
strategic risks
external risks
operational risks
Moreover, the risk related to the spread of pandemics and epidemics, with potential impacts on people, health system and business, is increasing.
The risks described below may have a material effect on our operational and financial performance. We invite our investors to consider these risks carefully.
Strategic risk
SCENARIO
MAIN RISK EVENTS
Price Scenario, risk of unfavourable fluctuations in Brent and other commodities prices compared to planning
assumptions.
TREATMENT MEASURES
• Actions aimed at improving the resilience (reduction of cash neutrality), flexibility (in terms of investment decisions)
and efficiency (capital discipline and action on structural costs) of the company;
• alignment of the gas supply portfolio to market prices and related sales contracts with indexation to the main European hubs instead of oil-linked; • renegotiation of gas supply portfolio to grant flexibility in gas offtakes;
• flexibilization of refining capacity and traditional electricity generation;
• maximization of biorefinery capacity;
• optimization of petrochemical plants.
DECREASING DEMAND/
COMPETITIVE ENVIRONMENT
MAIN RISK EVENTS
Contraction in demand/Competitive environment relating to the market demand and supply imbalance or an increase
in competitiveness leading to: i) reduction of sale volumes, ii) increase difficulties in defending customer base/develop
growth initiatives, iii) generate adverse dynamics in the prices of finished products.
TREATMENT MEASURES
• Integration of midstream and upstream activities and portfolio management of gas equity volumes to facilitate the maximization of the relative value; identification of projects with low break even and fast time-to-market;
• consolidation of the market share in the retail sales in Italy and selective growth outside; evolution towards the Mobility Services station;
• differentiation of the portfolio towards petrochemical products with higher added value, extension of the downstream supply chain and development of chemicals from renewable;
• maximization of value and loyalty of the Gas & Power retail customer base;
• growth in renewable technologies through partnerships, also with operators with distinctive skills in the sector (for more innovative technological areas).
CLIMATE CHANGE
MAIN RISK EVENTS
Climate change, referred to the possibility of change in scenario/climatic conditions which may generate phisical risks
and connected to energy transition (legislative, market, technological and reputational risks) on Eni’s businesses in the
short, medium and long term.
TREATMENT MEASURES
• Structured governance with the central role of the Board in managing main issues connected with climate change, presence of specific committees;
• medium and long-term plan to 2050, which combines business development guidelines for progressive industrial transformation with ambitious targets for reducing GHG emissions associated with energy products sold by Eni as well as offsetting emissions;
• our-year plan with provision for each business of operational actions to support and implement the industrial transformation indicated in the medium and long-term plan;
• Inclusion of energy transition targets in management incentive scheme;
• leadership on climate-related financial disclosures and participation to international initiatives.
EXPOSURE TO LONG-TERM CONTRACTS
(LONG-TERM SUPPLY GAS CONTRACTS)
MAIN RISK EVENTS
Referred to the possible mismatch of the cost of supply and the minimum take constraints envisaged by supply
contracts with respect to current market conditions.
TREATMENT MEASURES
• Diversified supply portfolio and prices-volumes renegotiation;
• portfolio balancing with sales to hubs (in Italy and in Northern Europe) of volumes not for mainstream distribution channels;
• legal defense, continuous control of arbitration management and negotiations by dedicated organisational structures
STAKEHOLDER
MAIN RISK EVENTS
Relationships with international, national and local stakeholders on Oil & Gas industry activities, with impacts also in
the media
TREATMENT MEASURES
• Integration of targets and sustainability projects (i.e. Community Investment) within the Strategic Plan and incentive program;
• focused communication plan and development of dialogue and discussion with local areas and communication initiatives aimed at spreading Eni’s strategy and activities, also through social media with a mainly institutional target, as well as through an international cross-media distribution plan of media content targeted to brand reputation and recognition initiatives;
• initiatives to meet and dialogue with stakeholders and strengthening of presence in critical areas in order to intensify the relationship management with local authorities and territories.
External risk
BIOLOGICAL
MAIN RISK EVENTS
risk related to the spread of pandemics and epidemics and the deterioration of health infrastructure and health
response capacity.
TREATMENT MEASURES
• Eni Crisis Unit’s constant management and monitoring to align, coordinate and identify reactions; • preparation and implementation of a plan to react to health emergencies (Medical Emergency Response Plan - MERP) to be adopted by all Eni subsidiaries and employers. The plan is also aimed at defining a business continuity plan;
• restrictive and preventive measures (also through alternative working methods) in offices and operating sites;
• coordination and centralization of protection and medical devices procurement;
• centralized management of international health emergency services.
GEOPOLITICAL
MAIN RISK EVENTS
Impact of geopolitical issues on strategic actions and business operations.
TREATMENT MEASURES
• Institutional activities with national and international players in order to overcome crisis situations;
• continuous monitoring of the environment, mainly focused on the critical political/institutional developments and regulatory aspects which can potentially affect the business;
• enhancement of Eni’s presence leveraging on economic and social issues of Countries where Eni operates
COUNTRY
MAIN RISK EVENTS
Political and social instability related to both political and social instability (in the Countries where the Group operates)
and criminal/bunkering events against Eni and its subsidiaries, with potential repercussions in terms of lower
production, project delays, potential damage to people and assets.
Global security risk relates to actions or fraudulent events which may negatively affect people and material and
immaterial assets.
Credit and Financing risk related to the credit proceeds delay and the financial stress of the partners.
TREATMENT MEASURES
• Institutional relations with ministries/local authorities, commitment to respect for human rights;
• presence of a security risk management system supported by specific sites and Countries analysis of the preventive measures; implementation of emergency plans aimed at maximum safety of people and the management of activities and assets;
• signing of specific repayment plans for some Countries, using already tested contractual or financial instruments;
• demand for sovereign guarantees and letters of credit to protect credit positions
ENERGY SECTOR REGULATION
MAIN RISK EVENTS
Impacts on the operations and competitiveness of the businesses associated with the evolution of the energy sector
regulation.
TREATMENT MEASURES
• Control of legislative and regulatory evolution; dialogue with institutions to represent Eni’s position;
• definition of strategic and operational actions in line with regulatory changes: the increase in refining capacity; the development of mechanical and chemical recycling, the use of feedstocks instead of palm oil, the development of biomethane, etc
Operational risk
ACCIDENTS
MAIN RISK EVENTS
Blow-out risks and other accidents affecting the upstream assets, refineries and petrochemical plants, as well as the
transportation of hydrocarbons and derivatives by sea and land (i.e. fires, explosions, etc.) with damages on people
and assets and impact on company profitability and reputation.
TREATMENT MEASURES
• Insurance coverage;
• real time monitoring for wells;
• proactive monitoring of accidental events with the identification of weak signals in the Safety Process;
• technological and operational improvements and Asset Integrity Management;
• rating of operators and vetting activities;
• continuous monitoring of technical and transport data;
• contract Risk Management (Pre/Post award);
• continuing education
CYBER SECURITY
MAIN RISK EVENTS
Cyber Security & Industrial espionage refers to cyber attacks aimed at compromising information (ICT) and
industrial (ICS) systems, as well as the subtraction of Eni’s sensitive data.
TREATMENT MEASURES
• Centralized governance model of Cyber Security, with units dedicated to cyber intelligence and prevention, monitoring and management of cyber attacks;
• strengthening of Cyber Security Operations infrastructures and services; the enhancement of workstation protection systems for surfing the Internet and e-mail, and strengthening of monitoring following the intensive use of smart working due to the COVID-19 emergency;
• constant updating and alignment of the rules dedicated to the information security management and data protection;
• Operating plans aimed at increasing security of industrial sites (in Italy and abroad), training and awareness initiatives dedicated to Eni’s employees;
• strengthening of the corporate culture in the Cyber Security with particular focus to the behaviors to be adopted (e.g. safe smart working).
INVESTIGATIONS AND PROCEEDINGS
MAIN RISK EVENTS
Environmental, health and safety proceedings may trigger impacts on company profitability (costs for remediation activities and/or plant implementation), operating activities and corporate reputation. Involvement in anti-corruption investigations and proceedings.
TREATMENT MEASURES
• Specialist assistance for Eni SpA and the Italian and foreign unlisted subsidiaries;
• continuous monitoring of regulatory developments and constant evaluation of the adequacy of existing presidium and control models;
• enhancement of the process of assigning and managing assignments to external professionals through new methods aimed at ensuring transparency and traceability;
• internal training activities at all levels on the topics of interest;
• monitoring of relations with the Public Administration and definition of routes for the management of relevant problems and for the development of the territory;
• constant discussion with the Ministry of the Environment on the authorization procedures as a part of remediation activities;
• continuous monitoring of the efficacy and efficiency of reclamation activities;
• focused communications;
• audit activities on compliance with anti-corruption regulations and 231 Legislative Decree
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