Enel proposes an original approach to country risk management. In the past, country risk essentially meant sovereign risk, but now we have a broader vision of what the term means, which includes the banking and currency crisis and for non-western nations the possibility that their currency could become non-exchangeable. We structure our investigations by focusing on three macro areas:
- Macroeconomics and finance;
- Social and geo-politics;
- Regulatory issues, taking into consideration any regulatory action that could affect the market' scenario.
Each one of these areas is strongly linked with the others, and often interact with each other.
Through Country Analysis we aim to analyze, monitos and measure the country risk keeping in mind both Enel's requirements and those of the relevant countries.
- Carry out studies on the most important countries with regards to the level of risk and the Group's investments;
- Identify the correct strategies, measures and tools to indemnify against any identified risks.
- Lay out a methodology for, implement and manage the Country Risk Valuation Model, a mathematical model that gives a score representative of country risk;
- Lay out a methodology for, implement and manage a model that estimates the effect of that risk on the profitability of both the Group's investments and the Group as a whole.
- Combine analysis and measurements, identifying a country's macroeconomic, political, fiscal, regulatory and normative trends and early warning signs, as well as provide medium- and long-term country risk predictions;
- Draw up a Country Risk Map in order to support the Portfolio Risk Management activity;
- Support the work of the Business Development, Merger & Acquisition and Strategic Planning, setting out the risk level.
This "home made"model takes into account the specific risks related to Enel's business in each country and is effective in managing and predicting those risks.