2011 Annual Report - Italcementi Group

4. Implementation of defined mitigation strategies and action and development of the
Enterprise Risk Management process.
5. Reporting to Top Management and the governance bodies on the main risks, and their
management and evolution; in this phase quantification of risks and opportunities is
integrated with the enterprise management process, for example in the budget, in
results forecasting reviews and in assessment of strategic projects.
Sustainable development and risk management: protection of people and assets
Sustainable development favors a corporate approach that balances economic growth,
protection of the environment and social sustainability. By constantly pursuing an optimal
balance among these elements and ensuring that benefits extend to everyone involved,
companies enhance their long-term value, ability to survive and competitive advantage,
thus helping to prevent industrial risks.
The Group checks that its protection and prevention programs are consistently applied to
all personnel in production sites (employees and other) and to all operations in its
companies.
Regulatory limits and Group sustainable development goals and initiatives are examined in
a special report (Sustainability Report) and also summarized in a specific section in this
report.
The Asset Protection Program continued in 2011; it qualifies the importance of risks and
develops a suitable prevention and protection policy, thereby limiting damage to assets and
consequent operating losses. The program is now a consolidated Group process.
Risks relating to the general economic and industry situation
The economic and financial situation represents an element of risk for the Group, also in
relation to its specific area of business, which is sensitive to changes in the economic
situation. Household and business propensity to invest in construction is affected by the
uncertainty and constraints of the general scenario.
Risks associated with energy factors
The cost of energy factors, which represents a large portion of Group variable costs of
production, can vary significantly as a result of factors beyond the Group’s control. The
Group has adopted measures to mitigate risks for certain energy factors by entering into
medium-term supply contracts. Furthermore the centralized procurement organization
enables the Group to benefit from more efficient relations with suppliers and to obtain
competitive conditions.
Risks relating to availability of raw materials
The availability of raw materials is a strategic factor in investment decisions. The Group
generally sources its raw materials – limestone, clay, gypsum, aggregates and other
materials used in the production of cement, ready mixed concrete and aggregates – from
quarries it owns (the majority) or quarries rented from third parties. For these and other
significant materials, the Group has also reached specific agreements with suppliers to
guarantee continuous, stable procurement, under terms and conditions at the best market
levels.
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