Main financial risks

Financial and top risks

Financial and top risks

Main risk and processing actions

Eni's top risk portfolio consists of 20 risks which are classified into:

strategic risks
external risks
operational risks

The risk of pandemics and epidemics with potential impacts on people and health systems as well as business is on the rise. We encourage our investors to carefully consider these risks.  Eni's top risks with respect to corporate objectives are shown below, with the specific actions indicated.

Strategic risk

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;
  • increase in value through the growth of production, M&A actions and business combinations;
  • integration of gas portfolio with LNG activities also through the development of integrated initiatives for the enhancement of gas equity (pipes and LNG) leveraging commercial skills, access to the end and trading markets;
  • targeted strategies for hedging the price of gas equity and hedging of commercial exposures with Value At Risk Limits, approved by top management;
  • maximize the optimization/ABT activities of the portfolio by fully capturing the value linked to the increased volatility of the gas markets and the flexibility of physical withdrawals;
  • maximization of synergies between the renewable capacity under development and power customer portfolio (integrated energy management and hedging with customer portfolio);
  • optimization of traditional production structures and green, organic and recycling business development

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, iv) reduction of demand.

Treatment measures

  • Optimization of portfolio management of equity volumes, also in relation to the different dynamics of the end markets;
  • alignment of the supply portfolio with market prices;
  • maximization of the export volumes of the LNG plants in the portfolio;
  • differentiated strategy of exposure coverage by commodity market and daily monitored;
  • integration of midstream and upstream activities and portfolio management of gas equity volumes, to facilitate the maximization of their value; identification of projects with low break even and fast time-to-market;
  • consolidation of the Italian network market share with requalification of the Italian network of properties on premium levels;
  • evolution towards the Mobility Services station with an integrated offer of carriers and services;
  • specialization in the chemical portfolio towards products with greater added value and extension of the downstream supply chain towards compounding;
  • development of chemical platforms from renewables and recycling;
  • organic growth in the customer portfolio abroad and gas/power customer base rebalancing in Italy with Anti-Churn actions;
  • loyalty of the retail customer base, also through the maximization of the contribution of businesses related to the provision of services for energy efficiency and distributed generation and E-mobility;
  • consolidation of the market position in the renewable energy sector, in particular in the countries of retail presence through the development of the pipeline of acquired projects;
  • increase in the flexibility of power plants through targeted investments, specialization in the capacity market and development of new services, ensuring the best integration with other business lines.

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; four-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;
  • assessment of the resilience of the portfolio through stress tests based on low carbon scenarios;
  • flexibility of strategy and investments;
  • diversification with the development of new business/products;
  • short-term and long-term management incentive plans that include objectives related to the “climate strategy” consistent with the guidelines defined in the Strategic Plan;
  • leadership in disclosure and adherence to international initiatives;
  • key role of low carbon research and technological development.

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.

Main risk events
Relationships with local stakeholders
on Oil & Gas industry activities.

Treatment measures

  • Integration of targets and sustainability projects (i.e. Community Investment) within the four-year strategic Plan and incentive program;
  • stakeholder management through a sustainable approach to activities and social and territorial development projects;
  • enhancement of local content, collaboration agreements with international organizations (FAO, UNDP, UNESCO, UNIDO...);
  • continuous dialogue with local institutions and the territory;
  • respect for and promotion of Human Rights through the operation of the Human Rights Management Model, analysis of the impact on human rights in business processes.

External risk

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.

Main risk events
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.

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

  • Geographical diversification of the portfolio with exit from marginal assets as well as targeted and synergic acquisitions of new assets;
  • institutional relations and negotiations with Ministries/Local Authorities;
  • 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;
  • request for sovereign guarantees and letters of credit to protect credit positions.

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: increase in the capacity of biorefineries and diversification of feedstock and products (phase out of palm oil, agro biofeedstock, Biojet production in Livorno and Gela, biomethane development); chemical development from renewable sources efficiency services, distributed generation development and synergies with the renewable business.

Main risk events
Permitting, relating to the occurrence of possible delays or failure to issue authorizations, renewals or permits by the Public Administration with impacts on project times and costs as well as repercussions in social, environmental and image and reputation terms.

Treatment measures

  • Constant dialogue with the institutions also with the aim of proposing legislation;
  • hearings in parliamentary committees;
  • continuous involvement from the early stages of the authorities and stakeholders on project objectives and progress;
  • transfer and sharing of know-how with the bodies involved, also through greater involvement of technical bodies;
  • supervision and monitoring of sectoral authorization procedures with the competent Local Authorities;
  • visits/inspections of representatives of the institutions to the sites concerned;
  • acquisitions of renewable energy plants through strategic partnerships and M&A operations of already authorized projects;
  • start-up of Eni’s central platform functional to the management of the Permitting and Environmental Compliance process of the operating sites.

Operational risk

Main risk events
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 incidental events with identification of weak signals in the Process Safety field and completion of the actions resulting from Audit and Risk Assessment related to Process Safety issues;
  • technological and operational improvements and continuous implementation of the Asset Integrity Management system to prevent accidents together with the increase in plant reliability;
  • standard contractual specifications (EniVoy for spot trips and EniTime for charter trips), sub-charters of Time Charter Ships to eligible counterparties and on the basis of international contractual standards;
  • vetting: management and coordination of activities relevant for the assessment, inspection, technical selection of ships and operator ratings and assignment of a rating to operators;
  • contract risk Management (Pre/Post award);
  • continuing education.

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 Operation infrastructures and services with a new management model, the extension of services to the cloud and the strengthening of technologies dedicated to the detection & reaction of attacks;
  • cyber threat intelligence: analysis and investigations aimed at proactively identifying anomalies, threats and cyber breaches concerning accounts, assets or corporate information;
  • constant updating and alignment of the rules dedicated to the information security management and data protection;
  • strengthening of critical infrastructures in Italy through the execution of specific Cyber Protection Programs and Technological Enforcement and monitoring for foreign subsidiaries aimed at directing and implementing technological measures and solutions in the Field of Cyber Security;
  • strengthening of the corporate culture in the Cyber Security with particular focus to the behaviors to be adopted (e.g. safe smart working).

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;
  • collaboration with stakeholders and the Public Administration (e.g. Ministries, Higher Institute of Health, Universities).

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