Risk management system

The context in which the Group currently operates, characterized by rapid macro-economic changes, financial markets instability and progressive developments of legal and regulatory compliance regulations, requires clear strategies and effective management processes aimed at preserving and maximizing value.

2015 witnessed the launch of a project for the development and implementation of a Risk Management framework that will be gradually extended to all Group operating companies and will support addressing and managing risks in accordance with industry best practices.

In line with development plans for this project, the Issuer appointed the Group Risk Officer to head up the Risk Management Function, whose task will be that of supporting Top Management with strategic planning through the comprehensive, in-depth analysis of relevant macro-factors for the business and the local contexts in which the Group operates, identifying and monitoring related risks.

As part of the risk management system being developed, the Group defined the universe of risk events that have a potential impact on operations (so-called “Risk Universe”), ranked into five risk categories and analyzed along three risk dimensions that are considered relevant for the business’s features and characteristics, as well as the context in which it operates.

Business context-related risks

So-called external risks that may compromise the achievement of the Company’s objectives, i.e. all events whose occurrence may not be influenced by corporate decisions. This category includes all risks arising from a country’s macro-economical and socio-political dynamics, sector trends and competitive scenario, as well as from industry-specific technological innovation and regulatory developments.

Because of the nature of such Risks, the Group must rely on its forecasting and managing abilities. Specifically, Salini Impregilo integrated risk vision in its strategic and business planning processes through the definition of commercial and risk guidelines and the development of a process for the prioritization and  selection of initiatives to be pursued, also and most of all based on the assessment of relevant risks linked to the country and/or sector in which operations are planned, rather than to the counterparty. Risk control is also ensured by monitoring the progress of strategic objectives also in terms of composition and diversification of the portfolio and its development over time in terms of risk profile.

Strategic risks

These are risks arising from strategic, business and organizational risks that may adversely impact Group performance and ultimately result in the non-achievement of strategic objectives. They include risks resulting from the choice of business or organizational model through which the Group intends to operate, those arising from M&A transactions, or again the non-effective management of the order portfolio or the relationships with key counterparties (clients, partners, suppliers, sub-contractors, etc).

Salini Impregilo considers risk as a key element for the preliminary assessment of decisions and strategic choices, so much so that it has envisaged integrating the strategy definition and development process with that for the identification, measurement and management of risks.
The choices pertaining to the adoption of a business or organizational model, the assessment about the opportunity of proceeding with an extraordinary transaction versus establishing a partnership are subject to preliminary analysis and evaluation of related risks and opportunities, with the concurrent identification of risk management and methods to be promptly actioned should such risks arise.

Financial risks

All risks linked to the availability of Group equity, depending on the management of receivables and cash and cash equivalents and/or the volatility of market variables such as interest and exchange rates. Specifically, liquidity management has the objective of ensuring the financial autonomy of contracts in progress, taking into account the structure of consortia and special purpose vehicles, which can tie the availability of financial resources to the execution of the relevant projects. Moreover, liquidity management takes into account restrictions to currency transfers imposed by the legislation of some countries. Salini Impregilo also considers specific risk areas such as the counterparty’s credit-rating and raw materials price volatility, equipping itself with effective financial planning tools. For a detailed description of financial risks, see Note no.32 to the Consolidated Financial Statements.

Legal and compliance risk

This risk class includes risks for the management of legal issues and/or risks related to compliance with laws and regulations (e.g. taxation, local legislation, etc.) required in order to operate in the sector and/or specific countries. Salini Impregilo deems that monitoring contractual issues linked to contract management and, particularly, the relationship with relevant counterparties, has a fundamental role. This also includes any internal and external fraud risks, and, more generally, the compliance with procedures and policies established by the company to govern its operations. With respect to the aforementioned  factors, Salini Impregilo implements a regulatory risk monitoring and management policy in order to minimize the impact of such risk, through a multi-level control system that entails collaborative and ongoing liaison with relevant counterparties and business units affected by regulatory developments and the comprehensive assessment of any potential impacts.

Operational risks

These are risks that could jeopardize value-creation and are due to an inefficient and/or ineffective management of the Company’s core business, particularly those linked to bid management and actual execution of contracts. The various risk areas that fall into this class include bid design and planning, effective supply chain, logistics and inventory management, as well as those linked to the management of IT systems, personnel and planning and reporting.

These risks arise during the execution of contracts, should Company policies and procedures not be adequate for the management or risk factors linked to the level of complexity of the project or unforeseeable events.

To this end, the Group intends to monitor such risks starting at the bidding stage of each contract for risk/benefit analysis of the project in the event of its award and its impact on the portfolio structure, both in terms of risk concentration and overall risk profile. At this time, Salini Impregilo, as part of a wider process, prepares a Pre-bid Risk Assessment aimed at identifying potential risks and impacts linked to the project, apart from the necessary mitigation and/or contingency measures to counter them. Risk surveillance activity is then performed again at tender stage and  monitored and updated during contract execution in order to promptly detect the risk exposure development and promptly implement adequate remediation measures.


Within the framework of the aforementioned framework for the identification and classification of risks applicable to Group operations, Salini Impregilo has adopted a cross-functional approach for the analysis of risk dimensions that are considered more relevant due to the specific features of the business. These dimensions include various risk areas identified and belonging to different risk classes.

Country risk

The Group pursues its objectives by operating almost everywhere in the world, leveraging business opportunities in different countries and hence exposing itself to the risks resulting from the characteristics and conditions dictated by them, such as the political, economic and social scenario, local regulation, taxation and operational complexity and, last but not least, safety conditions. Knowing and constantly monitoring Country risk through specific indicators enables the Group first and foremost to inform commercial strategies, as well as to gain an optimal understanding of the operating scenario and, therefore, adopt precautions and/or implementing actions aimed at removing barriers and mitigate potential threats.

Counterparty risk

The Counterparty dimension identifies potential criticalities linked to relationships with Clients, Shareholders, Sub-contracts and Suppliers of the Company, so as to create a comprehensive overview of the features of the partners with whom Salini- Impregilo should start or continue to collaborate. For each of the above counterparty types, risk factors linked to financial and operational reliability apply to a different extent, as does the potential strategic role of a partnership for a specific business initiative, as well as all aspects linked to legal and other compliance that safeguard the lawfulness of the relationship.

Contract risk

The Contract dimension is key for an effective analysis of all risks linked to the Group’s core activity, since it informs the definition of tools capable of identifying and monitoring so-called Contract risks starting from the bidding stage in a risk prevention perspective, as part of an in-depth analysis of the risks and opportunities linked to the pursuit of a specific activity. Another fundamental aspect is the ongoing tracking of risks once they have been consciously taken on by Management, managing the resulting risk exposure in a proactive, dynamic way, as well as its ongoing development over time.


Contract level) and a portfolio one (for assessment of the overall exposure to such dimension), in order to assess the Group’s risk profile as well as its compliance with the exposure limits imposed to its risk management capacity. The portfolio overview, moreover, enables, through the use of dedicated risk management tools, the performance of systematic assessments about the potential development of the risk profile upon occurrence of certain events and/or specific choices that may result in any changes to it.

The risk management framework, as outlined above and subject to further and future developments, intends to act as a support to decision-making and operational processes at every stage of the management of initiatives, in order to reduce the possibility that certain events may compromise the Group’s normal business operations or its strategic objectives: to this end, it is integrated in strategic and business planning processes, which, therefore, cannot be separated from the Group’s risk profile, as well as from its choices in terms of risk appetite