In the table below, Eni’s top risks are presented with regard to the Company’s targets. For a detailed description of these risks, or, in addition, for further less relevant uncertainties factors, see the section “Risk factors and uncertainties”.
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.
|Type of risk||Target||Main risk events||Treatment measures||Rif.|
|Commodity risk||Company profitability||Prolonged weak macroeconomic growth and crude oil oversupply.||Revision of capital expenditure plan; disposal plan; reduction of new projects break-even price; widespread efficiency initiatives||Integrated Annual Report 2016, Risk factors and uncertainties section pages 71-72|
|Operational risk, accidents||Company profitability and Corporate Reputation||Blow-out risks and other relevant accidents affecting the extractive infrastructures, refineries and petrochemical plants, the transportation of hydrocarbons by sea and land (i.e. fires/explosions, etc.) with impact on results, cash flow, reputation and strategies.||Geologic “Real time monitoring” of well drilling phases and pre-drill, real time evaluation of geohazards and geopressions risks, specific technological development and emergency management plans; specific HSE audit and plants monitoring; management and continuous monitoring of shipping operation and third operators, vetting activities.||Integrated Annual Report 2016, Risk factors and uncertainties section pages 80-82|
|Country risk||Company profitability||Political and social instability in the Countries of operations may lead to acts of internal conflicts, civil unrests, violence, sabotage and attacks, with consequent production interruptions and losses as well as interruptions in gas supplies via pipe and people and assets damages.||Implementation of the security management system with the analysis of the preventive measures specific for site, keeping efficient and long-lasting relationships with producing Countries and local stakeholders even throughout local social development and sustainability projects; diversification of portfolio assets since the exploration phase.||Integrated Annual Report 2016, Risk factors and uncertainties section pages 78-79|
|Compliance risk||Corporate Reputation||Negative impact on the Company reputation and business perspectives due to the lack in compliance (real or perceived) with the laws and rules, in particular on Anti-Corruption themes, on behalf of management, employees and contractors, with negative effects on profitability, strategies and shareholders return.||Establishing the Integrated Compliance Department directly reporting to the CEO; continuing training for compliance/ Anti-Corruption and higher management awareness on the culture of company ethic and integrity; the control on the adequacy of the design and correct application of the 231 Model (Watch Structure), continuous updating of the internal procedures (Code of Ethics, MSG, etc.), continuous monitoring of regulatory developments and a corresponding adaptation of the Anti-Corruption Compliance Program, process of analysis and notices treatment, audit activity, continuing control on the management of legal proceedings performed by dedicated organizational structures.||Integrated Annual Report 2016, Risk factors and uncertainties section page 83|
|Operational risk||Company profitability and Corporate Reputation||Environmental and health proceedings as well as evolution in HSE legislation may trigger contingent liabilities, impact on Company profitability (costs for remediation activities)and on Corporate reputation.||Integrated system of HSE management. Transversal organizational unit dedicated to legal assistance to HSE matters; monitoring of authorization processes of the remediation projects through a continuous dialogue with the stakeholders and the competent Authorities for the remediation activities; technological development activities with international universities and partnerships with environmental engineering company.||Integrated Annual Report 2016, Risk factors and uncertainties section pages 73-75|
|Strategic risk||Company profitability and Corporate Reputation||The impact of climate change mainly relating to drivers of trading environment, regulatory framework and technological development, physical risks and reputation.||Strengthening of the Climate Change issue in the strategic plan, with medium-term targets and capex in line with the 2025 Action Plan; update of the Climate Change program for the definition of a road map for long-term decarbonization; strengthening of gas as a pillar of the low-carbon transition. Development of a business model integrated with renewable energies; sustainable development of green refinery business and specific initiatives of bio-based chemistry.||Integrated Annual Report 2016, Risk factors and uncertainties section pages 80-82|
|Strategic risk||Relationship with Stakeholders, Local development and Corporate Reputation||Relationships with local and international stakeholders on Oil&Gas industry activities, with impact also in the media.||Dialogue and transparency towards stakeholders on Eni’s businesses and sustainability activities; detailed mapping of stakeholders requests; integration of targets and sustainability projects within the strategic plan and incentive program; participation in conferences and international forums also aimed at spotting any “weak signals” from the context.||Integrated Annual Report 2016, Risk factors and uncertainties section pages 78-79|
|Strategic risk||Company profitability||Potential differencies between the cost of supply and the minimum off take obligations in take-or-pay long-term gas supply contracts compared to current market conditions.||Prolonged supply portfolio restructuring process through the renegotiation of price-volume conditions and portfolio balancing through the sale of volumes not intended to commercial segments to the financial markets (physical and liquid financial hub) both in Italy and in Northern Europe.||Integrated Annual Report 2016, Risk factors and uncertainties section pages 79-80|
|Strategic risk||Company profitability||Unsettled extraordinary disposals.||Existence of a central organizational structure managing extraordinary portfolio operations; Eni’s portfolio analysis, in consideration of Eni’s segments of operations. Evaluation of alternative deal structures, further disposal targets through portfolio analysis; management and preservation of a fair amount of strategic liquidity.||Integrated Annual Report 2016, Risk factors and uncertainties section page 85|
|Counterparty risk||Company profitability||Upstream credit and financing risk partner related to the credit proceeds delay or cost recovery. Mid-downstream business credit risk.||Finalization of specific agreements on repayment plans of third parties receivables; negotiating, monitoring and soliciting towards the governmental authorities; carry agreements negotiation of; securitization package with in-kind withdrawals; receivables sold to financing institutions; time to bill reduction; strict selection and credit line for retail customers; captive insurance for an effective risk reduction.||Integrated Annual Report 2016, Risk factors and uncertainties section pages 85-86|
|Evolution in the legislation||Company profitability||Regulatory risk of the Oil, Gas&Power sector.||Participation in forums, advocacy of Eni interests in a continuous dialogue with the institutions and the regulatory authorities; proactive oversight of legislative and regulatory dynamics.||Integrated Annual Report 2016, Risk factors and uncertainties section pages 76-77|
|Operating risk||Company profitability||Cyber security and industrial espionage.||Internal structures and rules dedicated to IT security management and information protection, centralized governance model on Cyber security; units dedicated to prevention, monitoring and management of cyber attacks; operating plans aimed at increasing security of industrial sites, training and awareness initiatives dedicated to Eni’s employees.||Integrated Annual Report 2016, Risk factors and uncertainties section page 86|
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