Annual Report 2010 - AdP

The evaluation of risk is carried out from the perspective of incidence and impact probability, taking into consideration the risk
inherent and the respective residual risk. Correspondingly, this seeks to ascertain the effectiveness of the internal control system set
up by each company to maintain the level of risk at levels deemed acceptable.
The risks are evaluated across various dimensions and hence evaluating the impact takes into account diverse facets to each risk,
specifically:
• Financial;
• Reputational;
• Legal and/or regulatory; and
• Level of alignment with business objectives.
The perspective of risk incidence probability is similarly evaluated in accordance with a broad range of factors, for example:
• Existence and effectiveness of controls;
• Prior incidence of risk;
• Complexity of risk; and
• Installed risk management capacity (persons, processes, systems).
The main objectives of Internal Audit and Risk Control processes are the validation of the internal AdP Group company control
systems and the identification of factors of risk to core business activities, in conjunction with tests to evaluate the controls in effect.
To this end, work took place in all AdP Group company sectors of activity: specifically, water supply, the treatment of wastewaters
and the collection, treatment and recovery of urban solid wastes.
The risks related to classes of governance, strategy and planning, conformity and reporting are dealt with and monitored by each
individual company while never overlooking the regular, and whenever the circumstances so require, submission to the AdP SGPS
Board of Directors. The approach to operational and infrastructure class risks, beyond the coverage ensured locally by each company
and its respective governing body, is complemented by centralized structures of activity monitoring and control, which are attributed
responsibility for identifying and managing the main risks (for example: corporate human resource management, corporate financial
management, information technology system management).
Within the prevailing economic context, we may highlight certain risks that the AdP Group is more exposed to, especially:
• Company holding portfolio management;
• Alterations to the legislative and regulatory frameworks;
• Political, economic and financial developments;
• Bad debt liabilities;
• Credit and financing; and
• Financial sustainability.
The AdP SGPS Board of Directors has established regular monitoring actions in relation to the main aforementioned risks so as to
accompany their trends and ascertain levels of control with such processes currently operating as duly planned.
10. Preventing Conflicts of Interests
Members of the AdP - Águas de Portugal, SGPS, S.A. Board of Directors are fully aware of the conflict of interests regime defined
under the auspices of Law no. 64/93, of 26 August, the Public Manager Statute - (Decree Law no. 71/2007, of 27 March) and the
Principles of Good Governance of State-owned Companies (CMR no. 49/2007, of 28 March), and which establish rules regarding
the cumulative holding of positions and the requirements stipulated for the non-participation in decisions involving interests specific
to these governing body positions. The Board also takes into consideration Law no. 4/83, of 2 February and transposed into Law no.
25/95, of 18 August.
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