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Prysmian Group – 2015 Sustainability Report

Group ID Card

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41

Risk Management

The Prysmian Group adopts a system of internal control and risk management based on tools and

information flows that enable the Board of Directors to take strategic decisions and establish

guidelines for the system in an informed manner, considering the context in which the Group

operates and the related financial, environmental and social risks.

The value creation policy pursued by the Prysmian Group is and always has been based on the effective

management of risks. Commencing from 2012, on adoption of the recommendations of the “Corporate

Governance Code for companies listed on the Italian Stock Exchange" regarding the management of risks,

Prysmian has taken the opportunity to strengthen the Group's governance model and implement an

advanced risk management system. This promotes the pro-active management of risks using a structured

and systematic tool that supports the maindecision-making processes. This Enterprise Risk Management

(ERM) model, developed in line with internationally recognised models and best practices, allows the Board

of Directors and management to evaluate in an informed manner those risk scenarios that might compromise

the achievement of strategic objectives, and to adopt tools that are able to foresee, mitigate or manage

significant exposures.

The Group's Chief Risk Officer (CRO), appointed to govern the ERM process, is responsible for

guaranteeing together with management that the main risks faced by Prysmian and its subsidiaries are

identified, assessed and monitored on a timely basis. In addition, an Internal Risk Management Committee

comprising senior managers ensures, via the CRO, that the ERM process remains dynamic to reflect

changes in the business, requirements and events affecting the Group over time. The CRO reports

periodically (at least twice each year) to senior management on these changes.

The ERM model adopted, formalised in the Group ERM Policy that incorporates the guidelines for the

System of Internal Control and Risk Management approved, in turn, by the Board of Directors back in 2014,

follows a top-down approach, i.e. based on direction from senior management and the medium/long-term

strategies and objectives of the business. This extends to all types of risk/opportunity that are potentially

significant for the Group. These are shown in the risk model - presented below - which groups the areas of

internal and external risk into five families that characterise Prysmian's business model:

Strategic Risks: risks deriving from internal and external factors, such as changes in market conditions,

business decisions that are wrong and/or implemented improperly, and slow reactions to changes in the

competitive environment that might threaten the Group's competitive position and the achievement of its

strategic objectives;

Financial Risks: risks associated with the availability or sources of finance, or the ability to manage

efficiently the volatility of exchange and interest rates;

Operational Risks: risks deriving from events or situations that limit the effectiveness and efficiency of

key processes, affecting the ability of the Group to create value;

Legal and Compliance Risks: risks connected with violations of national, international and sector

regulations or professionally improper behaviour that does not comply with the Code of Ethics, which

expose the Group to possible penalties and damage its reputation in the marketplace;