2011 Annual Report - Italcementi Group

- Selection of priority risks and definition of relevant reaction strategies, of the governance rules within the
Group as well as the necessary actions necessary to supplement and improve risk management systems;
several risks are managed locally at the subsidiaries, while the management of those requiring specific
expertise or a cross coordination, is centralized;
- Implementation of the mitigation actions/strategies defined from time to time and development of the
Enterprise Risk Management process;
- Report to the top management and control bodies on the main risks and their management and evolution.
The risk quantification and occurrence are integrated in the management system, like budget, provisions
and analysis studies on the most important investment projects.
The risk management and internal control system relating to the financial disclosure process also benefited
from:
- the continuous development of an integrated organizational governance system (organization notices, job
descriptions, corporate powers and processes) whose tools are available in a Knowledge Management
Database, B.E.S.T. (Business Excellence Support Tool), which allows easy access to information and
encourages cross-circulation within the Group;
- a more timely organization and planning relating to the provisions of Law no. 262 of December 28, 2005,
stating “Provisions for the protection of savings and the regulation of the financial markets” and the following
corrective decrees (hereinafter the “Law on Savings”) issued by lawmakers with the aim of increasing the
transparency of corporate disclosure and enhancing the internal control system of listed companies.
In regard to this law, far-back Italcementi S.p.A. launched a series of activities, described in section 2 below,
which are included in an action plan integrated into the Company’s processes. The existing control procedures
guarantee the effectiveness of the current system and the data reliability. The Company therefore believes to
comply with legal requirements, and guarantees the completeness and reliability of its financial disclosures.
2. Description of the main features of the system
2.1 Stages in the risk management and internal control system
Italcementi has established its own model for the assessment of the internal control system relating to
disclosure about financial position and results of operations (hereinafter the “Operational model”) and has
established the operational approach for undertaking these activities. This model is based on the CoSO
framework, issued by the Committee of Sponsoring Organizations of the Tradeway Commission (CoSO), and
also takes into account the document “Internal Control over Financial Reporting - Guidance for Smaller Public
Companies”, which was also drafted by the CoSO.
The Operational model defined by Italcementi is based on the following main elements:
a) Preliminary analysis. This is undertaken annually or whenever considered necessary and aims to identify
and assess risks relating to the internal control system with regard to financial position and results of
operations’ disclosure , so as to establish the priorities for documenting, assessing and testing the
administrative and accounting procedures and the related controls. Identification of the relevant entities and
processes is based on quantitative elements (weight of revenues and assets of a single entity on
consolidated amounts, amount of the consolidated financial statement items related to a particular process)
and on qualitative elements (country where an entity operates, specific risks, risk levels attributed to the
various items);
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