14MB - Pirelli

EXTRAORDINARY SESSION CONSOLIDATED FINANCIAL STATEMENT SUSTAINABILITY REPORT DIRECTORS' REPORT PRELIMINARY INFORMATION
The Pirelli Group Internal Control System is set up in such a way
as to ensure fair disclosure and adequate control of all activities,
particularly in areas that are considered potentially at risk. This
is the operating translation of the principles set out in the Group
Ethical Code, and represents a collegial process intended to pursue
fundamental business ethics: fairness, transparency and honesty.
The fundamental principles of this system are the efficiency, cognizance
and verifiability of company operations, the reliability of
accounting and operating data, formal and also substantial compliance
with laws and regulations, and conservation of company
assets over time.
The Board of Directors is responsible for the Internal Control
System, defining its guidelines and periodically auditing its adequacy
and actual performance. It relies on the Internal Control
committee and the Corporate Governance Committee, as well as
the Internal Audit Department of Pirelli & C. S.p.A. to carry out
these activities.
As part of its risk management activities, Pirelli identifies potential
risks through the Control Risk Self Assessment (CRSA)
process. Implementing the Management Plan, this process relies
on methods of identifying and assessing risks by management at
the individual affiliates located in different countries.
The CRSA method has been incorporated in the Planning and
Control procedure as part of the Group’s administrative processes,
in view of developing the management of corporate risks within
the framework of that procedure. The aim was to “automate”
its application so that the company’s various operating units can
independently assess risks and adopt appropriate countermeasures
together with elaboration of the annual Management Plan.
This reflects the clearly high sensitivity to unknown factors tied
to local operating and socioeconomic conditions.
All risks to company stability are monitored and assessed, such as
meeting targets, protecting corporate assets, the reliability and integrity
of information, corruption and the operating risks that are associated
the specific company and/or the specific geographical location.
This activity takes a systematic approach in order to analyse existing
controls and identify any improvements and reduce the risk profile.
Consequently, the CRSA activity is carried out in order to:
—— increase management’s attention, awareness and responsibility
for risks;
—— provide a systematic approach to identifying and measuring the
risks that might have a negative impact on strategic objectives;
—— prepare a profile that indicates how existing controls have reduced
the current level of risk;
—— establish how risk can be further reduced through greater controls;
—— prepare realistic action plans to mitigate major risks;
—— obtain a risk profile that, as a key tool in the decision-making
process, is used for change management;
—— provide a structured and disciplined risk assessment approach
as part of the planning and control process.
172 PIRELLI & C. S.p.A. MILAN