On June 26, 2009, Enel centralized all the expertise and responsibility regarding risk management in the new “Group Risk Management” Department. The objective was to “ensure the top management of the actual implementation and control of the risk management processes for the entire Enel Group with regard to all financial, operating, business, and other kinds of risk”.
According to the new structure, the Enel Group’s Chief Risk Officer is completely independent and autonomous with respect to the business areas and reports directly to the Chief Executive Officer.
The Group Risk Management Department is divided into the following areas:
1. Enterprise Risk Management
The enterprise risk management establishes a common structure and the risk assessment criteria, as well as coordinating the risk assessment process entrusted to the line Risk Manager. It defines priorities using a single enterprise risk management software to collect all the indicators regarding significant business risks, producing integrated risk reporting for the top management, and carry out in-depth analyses on the determinants of the significant risks and their correlations. In addition to the foregoing, a new risk-governance system will be developed through the definition of rules, responsibilities, and information flows and the establishment of new risk committees. The Enterprise Risk Management project, which involves all the units of the GRM Department, began in the first quarter of 2010 and will end early in 2011.
2. Financial and Strategic Risk Management
The financial and strategic risk management is responsible for analyzing, monitoring, and controlling all the Group’s internal financial risks (i.e., exchange rate risk, interest rate risk, equity, liquidity). In addition, it has the task of implementing a “Business Plan at Risk” process on a consolidated basis, with the objective of assessing – through an integrated reference model and on a stochastic basis – the impact of the most important risk factors (for example, commodity prices, energy prices, electricity demand, interest rates, exchange, inflation, etc.) on the Company’s results in terms of margins, cash flow, debt, and financial indices. The liquidity risk is managed through a careful daily, weekly, monthly, and quarterly (carried out on a rolling monthly basis) financial planning process and an appropriate cash management, entering into credit line agreements, issuing commercial papers, and in general adopting a judicious funding policy.
Credit risk regarding financial counterparties is constantly monitored with regard to a minimum rating level. The Company avoids the concentration of positions between counterparties and uses credit support annexes (CSA) as risk-mitigation instruments.
3. Commodity Risk Management
The Commodity Risk Management Unit is in charge of analyzing, monitoring, and controlling commodity risk (energy, fuels, metals, CO2, etc).
4. Insurance and Environmental Risk Management
The pre-existing Insurance Unit has been entrusted with the additional responsibility of managing environmental risk and in particular to analyze the results of the risk assessment in this field and to devise strategies mitigation strategies. With regard to insurance, it has the additional tasks of the redefining the Enel Group’s approach to the insurance market and managing its planning of captive insurance, assisting the Group divisions and companies in managing significant damage.
5. Counterparty Risk Management
Commercial risk is closely monitored by this Unit. By the end of 2010, a detailed situation of existing exposures (by country and division/company) will be updated and managed according to a new model for analyzing credit positions, which will be constantly updated and managed.
6. Country Risk Management
The Unit has been set up for the purpose of establishing a model for assessing country risk, setting forth guidelines for managing it, pinpointing the strategies, measures, and instruments of risk mitigation, preparing specific studies and strategic support for Merger & Acquisition and business development, including the establishment of the country risk premium. It also manages relations with agencies insuring export credit for the Group.
7. Operational Risk Management
The Unit is responsible for determining, measuring, reducing, and monitoring all the operating risks connected with the Enel Group’s industrial processes. Together with the other relevant Units, the Operational Risk Management Unit analyzes the operating risks connected with the Enel Group’s main investment projects and the completion of strategically important investment projects.
Last update: 19/07/2011
