2012 Annual Report - Italcementi Group

The analysis, prepared upon instruction of the Director in Charge of the Internal Control and Risk Management
System and with the support of the Chief Risk Officer, details the level of expected risk in each Country where
the Group operates, as well as the various kind of risk, dividing them into two main categories: those that are
independent from the determination and the conduct of the Company (general economic situation, political
risks, etc.) and those that may be mitigated as a result of appropriate measures undertaken by the Company
itself.
In light of the quantification of expected risks, the Board of Directors determines the level of exposure to risk
considered acceptable and consistent with the strategic objectives it has defined.
Risk exposure, as measured during the preparation of the budget, is constantly monitored both at Italcementi
and Group level; for this purpose each Primary Risk Owner prepares a half-yearly report that ranks the most
significant risks and, where appropriate, modifies the corresponding mitigation plan previously prepared. The
Board of Directors and the Control and Risk Committee are kept informed by the Chief Risk Officer on the
evolution of risks and their subsequent mitigation.
In addition to the risk analysis conducted in view of the approval of the annual budget, every strategic plan of
the Company is preceded by a risk analysis that includes the definition of best and worst case scenarios, the
chances of achieving a profit, given by an expected confidence level, and the expected impact of each type of
risk, also in light of a series of measures to mitigate risks in regard of which the Company may take action with
appropriate measures.
4. Description of the main features of the Internal Control and Risk Management System in regard of
the financial reporting process
4.1 Phases of the risk management and internal control system
The risk management and internal control system mitigating risks in relation to the financial reporting process
consists of a set of corporate rules and procedures, adopted by the various operating structures, aimed at
ensuring trustworthiness, accuracy, reliability and timeliness of financial reporting.
Italcementi has defined its own reference Model for the assessment of the Internal Control and Risk
Management System related financial disclosure (hereinafter, in short, “Operational Model”), detailing the
operational approach for the performance of activities. This Model is based on the principles contained in the
CoSO framework and in the document “Internal Control over Financial Reporting - Guidance for Smaller Public
Companies”, also developed by CoSO.
In this Model, the risk control system is considered together with the internal control system in relation to the
financial reporting process.
The Operational Model defined by Italcementi is based on the following main elements:
a) Preliminary analysis. This activity, carried out on an annual basis and whenever deemed necessary, is
aimed at identifying and assessing the risks related to the Internal Control and Risk Management System
with regard to financial reporting, in order to determine priorities for action related to documentation,
assessment and testing of administrative and accounting procedures and related controls. The identification
of the relevant quantities and processes is based on quantitative (weight of revenue and assets of a single
entity on consolidated amounts, the carrying amount of consolidated financial statement items related to a
particular process) and qualitative (the Country in which an entity operates, specific risks, risk levels
assigned to the various items) factors;
b) Operational planning. Every year the activities are planned on the basis of the priorities identified through
the preliminary analysis and other assumptions, if any;
c) Analysis of controls at company level. Single entities, within the area of action identified in the
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