Management of risks and opportunities

One of the key elements of the Corporate Governance System of Ansaldo STS is the Enterprise Risk Management (ERM)4 system, which involves all organisational levels with different roles and responsibilities. The aim of ERM is to:

  • increase the awareness of business risks by identifying, measuring and monitoring risks;
  • improve the sustainability of business performance through risk prioritisation and mitigation strategies;
  • ensure transparency and strengthen the Company’s reputation by spreading the culture of risk, monitoring and compliance.

Risk Assessment5 is an essential element of the ERM Framework and contributes to defining business strategies by identifying and managing potential risk events that are likely to affect the actual achievement of business goals and results. Risk Assessment also includes the identification and preparation of action plans which are implemented to mitigate the main risks.

In accordance with the European standard ISO 9001:2015, the Ansaldo STS Enterprise Risk Management model has been updated so as to consider the opportunities that may be presented by a situation that favours the achievement of an expected result, determined by considering as a reference the Company’s Strategic Plan and Sustainability Report.

As such, certain sustainability topics are included in the ERM.

SUSTAINABILITY TOPICS

ENTERPRISE RISK MANAGEMENT

CATEGORY

SUB-CATEGORY

THE ENVIRONMENT, HEALTH AND SAFETY 

HSE

HSE awareness

OHS and Environmental Non-Compliance

STRATEGIC

Process improvement

BUSINESS CONTINUITY

Business Interruption

Crisis management

Technical standards evolution

HUMAN RESOURCES MANAGEMENT

RESOURCES

Resources allocation

SOCIAL ASPECTS

DELIVERY

Customer satisfaction

SUBCONTRACT

Supplier qualification

ANTI-CORRUPTION

LEGAL

Export Compliance

The risks considered in the SUB-CATEGORIES of the ERM are described below.

THE ENVIRONMENT, HEALTH AND SAFETY

  • HSE awareness: possible risks of extra costs in the tendering phase, concerning health, safety and the environment (HSE) with particular regard to emerging countries (with "low standards"), especially when particular issues can occur in business relations with partners who do not have the same attention levels adopted by Ansaldo STS.
  • OHS (Occupational, Health and Safety) and Environment Non-Compliance: possible risks of non-compliance, by the Company or subcontractors, with requirements related to regulations on the environment, occupational health and safety and respect for human rights; possibility of accident occurrence, with suspension of works, reputational damage, delays and penalties. Opportunities to improve ECO design aspects and the reduction of environmental impacts in product design to exploit new business opportunities and, through the communication of these aspects, to enhance the image of the Company.
  • Process improvement: opportunities to reduce electricity consumption of the lighting systems for Italian sites, with consequent environmental benefits.
  • Business interruption: possible risks of catastrophic events (natural disasters, epidemics and communicable diseases, work conflicts, strikes, terrorism and political changes) that could have an impact on IT systems and services with consequent business interruption.
  • Crisis management: issues related to the health and safety of workers caused by the worsening of the geopolitical situation of at-risk countries in which the Company operates, caused by natural disasters, accidents, conflicts, and terrorism.
  • Technical standards evolution: risks of non-compliance of the Integrated Management System with international standards such as IRIS or CENELEC EN 50128, which could result in lost opportunities, customer dissatisfaction and sanctions.

HUMAN RESOURCES MANAGEMENT

  • Resources allocation: possible risk of late development of the necessary skills for the Company’s strategic needs.

SOCIAL ASPECTS

  • Customer satisfaction: possible risk of not being able to respond to feedback from customers, thus impacting their level of satisfaction. Opportunities to improve the process of gathering feedback and managing the lessons learned.
  • Supplier qualification: possibility of inadequate evaluations of the technical and financial reliability of suppliers due to the lack of preliminary analysis related to the information collected by the project teams.

ANTI-CORRUPTION

  • Export Compliance: possible risk of late implementation of the export control regulation; possible critical issues related to the application of an anti-corruption plan able to meet the different regulatory requirements at local level worldwide.

BUSINESS CONTINUITY

In 2017 Ansaldo STS started the creation of a Business Continuity Management System integrated with the existing risk prevention and mitigation activities, that ensures the necessary operational continuity even against potentially disruptive events.

OTHER RISKS ASSESSED AND MANAGED

With a view to continuous improvement, Ansaldo STS carries out the assessment of specific environmental risks which, due to their low inherent and residual value, are not included in the ERM. The following is a brief description of these risks and the related management methods.

DIRECT AND INDIRECT GHG EMISSIONS

Risk description

  • Environmental impact of production processes, product composition and increase in energy consumption.
  • Possible negative effects on the activities to be carried out influenced by climate change.
  • Increased energy consumption costs.

Risk management

  • Analysis and assessment of risk to climate change at the international level.
  • Implementation of operational control procedures.
  • Definition of environmental objectives.

POLLUTING AIR EMISSIONS

Risk description

  • Environmental impact of production processes, product composition and the need to reduce or eliminate hazardous substances.
  • increase in technology investment costs.
  • Changes to laws that involve risks of penalties.

Risk management

  • Implementation of monitoring systems for processes and plants.
  • Specific training on company standards and changes in terms of process / product.

ENERGY CONSUMPTIONS

Risk description

  • Growth in costs related to energy consumption.
  • Less ability to compete.

Risk management

  • Investments to reduce consumption by verifying potential profitability.
  • Adoption of projects aimed at reducing energy consumption in factories and using energy from renewable sources.

WASTE AND WASTE WATER

Risk description

  • Failure to comply with the regulations by the company and suppliers on projects / activities
  • Changes to the legislation with sanctioning risks.

Risk management

  • System for monitoring the evolution of regulations worldwide.
  • Adoption of projects aimed at reducing the production of factory waste and waste water management.

WATER RESOURCES

Risk description

  • Increase in technology investment costs.
  • Changes to laws that involve risks of penalties.

Risk management

  • Implementation of monitoring systems for processes and plants.
  • Specific training on company standards and changes in terms of process / product.

 

4 The Enterprise Risk Management approach considers Article 7 of the Corporate Governance Code published by “Borsa Italiana” for publicly traded companies and complies with the principles of standard ISO 31000:2009.
5 The Risk Assessment process adopted by Ansaldo STS refers to the internationally recognised “Enterprise Risk Management” framework of the “Committee of Sponsoring Organisations of the Treadway Commission” (COSO report).