Risk management

The Mondadori Group’s internal control and risk management system refers to the set of procedures, organizational structures and associated activities designed to ensure proper management of the company in line with its pre-established objectives, through adequate identification, measurement and monitoring of the main risks it faces.
The guidelines and overarching themes of the internal control and risk management system are based on the principles set out in Enterprise Risk Management (ERM), an international standard drawn up by the Committee of Sponsoring Organizations of the Treadway Commission (COSO Report).
As of 2008, when defining these guidelines, the Mondadori Group has followed a process designed to identify, measure and manage the main risks and uncertainties it faces as it pursues its business objectives.
It has established a Risk Management function, which is responsible for developing an internal risk management model and overseeing the execution and periodic updating and monitoring of the process.
The significance of the risks – which are classified into categories and sub-categories – is determined based on measures of their likelihood of occurrence and their impact not only in financial terms, but also in terms of market share, competitive advantage and reputation.
Using a self-assessment process, company management identifies the risks associated with their areas of responsibility and assesses their effects on the objectives previously set out by overall business managers and staff. The assessment is carried out both at the level of inherent risk, i.e. in the absence of mitigation measures, and residual risk, following actions taken to reduce the likelihood of the occurrence of the risk event and/or to contain its possible negative effects.
The results are collated and processed by the Risk Management function and reported specifically to the Risk and Control Committee, the Board of Statutory Auditors and the Board of Directors.
The status of the risks is reviewed and updated at least annually.
The existence and effectiveness of mitigation actions, as reported by management in the assessment phase, is checked by the Internal Audit function.
In addition, to bring the residual risk back below an acceptable risk threshold (the “risk appetite”), the Risk Management function works in conjunction with company managers to plan and implement risk response actions, mapping the additional mitigating actions it prepares.

CONTINUING IMPACTS OF THE CORONAVIRUS EMERGENCY
The pandemic crisis has reiterated, on a global level in a new and dramatic way, the issues related to health, environment and welfare, placing sustainability more than before at centre stage.
For some time now, the Mondadori Group has classified the risk areas with the greatest impact related to Sustainability, adding in 2020 the risks associated with the effects of the pandemic.
The pandemic has deprived societies of the benefit of planning, understood as linear progress, unhindered by external contingencies.
The lesson learned is to take the necessary actions to counteract unpredictable risks and implement the principles of Risk Management & Business Continuity, in order to make organizations more resilient.
The management plans implemented by the Mondadori Group in response to the pandemic crisis include the complete and up-to-date mapping of pandemic risks, comprising both risks deriving from the direct impacts on business (production stoppages, slowdowns in receiving orders from clients, etc.) and the indirect impacts from organizational measures (delays in production, etc.).
Based on the results of the analyses carried out, below are the main risks that the Group is exposed to and the mitigation actions undertaken.
The areas of risk are grouped as follows:

• associated with the economic scenario;
• legal and regulatory;
• financial and credit;
• strictly business-related, understood as product competitiveness;
• associated with brand protection.