We identify, analyse, quantify and monitor risks and develop strategies to manage them.
We identify, monitor and manage business risks including market risks, country risks and risks associated with the cyclical nature of the oil and gas industry.
Eni has developed and adopted a model for Integrated Risk Management (IRM) that aims to ensure the company takes risk-informed decisions. Both current and potential future risks1 need to be taken into detailed, systematic account – over the medium and long term – to provide a comprehensive overview. In addition, the IRM model seeks to increase awareness at all levels of the organisation that appropriate risk assessment and management can affect the company's value and ability to deliver on targets.
The IRM Model demands a structured and systematic approach, inspired by international best practice and drawn up according to guidelines contained in the Internal Control and Risk Management System. These require governance to be split into three levels of control:
The Board of Directors (BoD) has a central role to play in risk governance because it is responsible for defining the nature and level of risk in line with the company’s strategic objectives – including in its assessments all risks that could affect the medium- to long-term sustainability of the business. In addition, after consultation with the Control and Risk Committee, the BoD draws up the guidelines for the management of risks, so they can be properly identified and measured, managed and monitored. Every three months the CEO makes a presentation of Eni’s major risks, using the IRM process, for the scrutiny of the BoD. This takes into consideration the scope of the work and the specific risk profiles of each line of business – and its respective processes – in order to produce an integrated risk-governance policy. The CEO also has a duty to ensure the IRM process evolves in line with the company's business dynamics and also the legislative framework. Finally, the Risk Committee has an advisory role to play with regard to major risks; at the request of the CEO, it examines key outcomes of the IRM process and delivers an opinion.
The process involves continuous and dynamic risk management, enhancing the existing systems at a line of business level as well as those of the company as a whole, while promoting their integration with the specific methodologies and tools of the IRM model. On 4 July 2016, the new Management System Guideline Integrated Risk Management (MSG) were published to strengthen the business unit’s role in supporting Eni’s decision-making processes.
The new Management System Guidelines provide more detail on the various stages and activities that make up the IRM process and update the roles and responsibilities of the key players. It takes a top-down, risk-based approach that starts by defining Eni's Strategic Plan and then supports its implementation through periodic risk-assessment and treatment and monitoring cycles, as well as analysis of the specific risk profiles of the company’s major operations. The IRM process comprises six sub-processes:
Two assessment cycles took place during 2016. During the first half of the year, the Annual Risk Profile Assessment was carried out, involving 64 subsidiaries in 22 different countries, while in the second half of the year the Interim Top Risk Assessment was completed. The latter involved updating assessments and handling Eni's major risks and main business risks.
In the second half of the year, an analysis of the long-term risk profile and of themes related to climate change was undertaken, based on a low-carbon scenario2. This involved an in-depth investigation of how the context is evolving, considering various important drivers (the market scenario, technological and legislative development, physical changes and themes linked to reputation) and an analysis of the potential impacts on the company's business model in line with its approved strategic objectives. The results of the two assessment cycles were presented to the company’s administrative and auditing bodies in July and December 2016.
Three monitoring cycles of Eni's top risks have been completed. Monitoring risks and their corresponding management plans allows risk trends to be analysed (by updating relevant data) and the implementation status of the mitigation measures put in place by management. The top-risk monitoring results were presented to the company’s administrative and auditing bodies in March, July and October 2016.
In addition, during the second half of 2016, specific de-risking objectives were identified for Eni's key risks, which were then formalised in the 2017-20 Guidelines published by the CEO. Specific chapters dedicated to risk factors (both at consolidated and business level) and the corresponding mitigation measures were drawn up for the 2017-2020 Strategic Plan.
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