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Risk Management

A2A has defined a risk model that takes account of the Group’s characteristics, its multibusiness vocation and the sector to which it belongs. The process of self-assessment of risks which commenced in 2010 directly involves management. The Group has set up a new Risk Management Function, to which responsibilities in the Enterprise Risk Management process and Energy Risk Management process (already consolidated) respond, with the aim of further developing and integrating risk management activities into the business process.
Set out below is a description of the main risks and uncertainties to which the Group is exposed, considering the sectors in which it operates and the specific aspects of its business model.

Type of risk Description
Legislative and regulatory risk A potential source of significant risk are the constant (and not always predictable) changes in the legislative and regulatory situation in the electricity and natural gas sector
Type of risk Description
Operations – Production efficiency/business interruption The main operating risk to which the Group is exposed is connected with the ownership and management of electricity power stations, cogeneration plants,  distribution networks and plants in general.  These plants are naturally exposed to the risk of events which may cause significant damage to the assets themselves and, in the more serious cases,  jeopardise production capacity. These risks are controlled through operational activities (maintenance, spare parts, etc) and insurance policies
Customer satisfaction Customer satisfaction is especially important for A2A in the light of the organisational and economic efforts that the Group makes to ensure top service levels, which find confirmation in the official findings of the Energy Authority
Health and safety Represents one of the most important risks and one of those having the greatest effect on public opinion. For A2A health and safety are fundamental and the Group adopts a prevention and protection policy aiming at “zero risk” by promoting constant improvement and a safety culture without limiting itself to mere compliance
Information technology infrastructure This type of risk refers to the features of the software and hardware infrastructures supporting business activities
Internal skills Checks the alignment of personnel skill training and growth processes with the Group’s  development strategies, as well as the adequacy of the resource management policies considered “critical”
Environmental risk A2A  is locally active through the Environment Sector and has adopted a suitable Group Quality, Environment and Safety policy as well as making a strong commitment to the subject of energy sustainability in general
Commodity risk, including currency risk Risk linked to energy product price volatility (gas, electricity, fuel oil, coal, etc.) and environmental certificates (ETS, EUAs, green certificates, white certificates)
Interest rate risk Risk of incurring additional financial costs from an adverse change in interest rates
Liquidity risk The possibility of being unable to meet obligations, of being unable to dispose of assets or obtain adequate funding (funding liquidity risk) or of being incapable of easily terminating contracts or counterbalancing specific exposures without a significant drop in market prices due to insufficient market liquidity (market liquidity risk)
Credit risk The risk of a loss due to the possibility that a counterparty does not settle its contractual obligations by the means and within the time established
Default and covenant risk This risk relates to the possibility that loan agreements or bond regulations may contain provisions that enable the counterparty to require the borrower to repay the amount lent immediately on the occurrence of specific events
Type of risk Description
Environmental risks – Emission Trading Scheme Risk The issue of environmental obligations is characterised by its high complexity and transversality and regards in particular the financial and market aspects, also in the light of possible developments on the subject and management strategies which could be the source of competitive advantages/disadvantages for the Group. Also analysed are possible scenarios relating to changes in sector legislation
Assessing and monitoring that investments are implemented The set of risks falling under this category ranges from investments of a “technical” nature (e.g. new production sites), which require large amounts of capital, to investments in strategic shareholdings. Particular focus in this category is given to the risks, very closely connected with the Group’s activities, connected with an inefficient realisation of the investments approved and/or an inadequate monitoring of the progress being made, which can jeopardise expected returns