Identifying and managing emerging and future risks is critical to ensuring business continuity and achieving our goals.
Our internal control system consists of a series of safeguards that aim to identify, monitor and mitigate the risks identified in the various business and customer segments.
The Sustainable Development Assessment model subjects the Group's operations to an ex-ante ESG impact assessment. This complements the more traditional risk, compliance and legal assessments and supports our intention to make choices with positive impacts that generate not only economic value but environmental and social value too.
The various types of risk are set out within the Group Risk Policy, which is approved by the Board of Directors and updated every six months, and outlined in the Risk Regulation and associated documents, each of which relates to a specific risk category.
In particular, risk monitoring tools also include aspects related to the management of social, environmental and economic risks. We are fully committed to making responsible investment decisions in order to grow awareness and transparency.
Climate, environmental, social and governance (ESG) risks are identified by the Risks Directorate and established in line with financial and banking regulation.
Specifically, climate and environmental risks include the following elements:
ESG risks are monitored and assessed by a dedicated unit within the Risk Department, as part of second-level control activities.
The Risk Methodologies unit assesses the climate and environmental risks of new operations based on an internal qualitative and quantitative method that enables separate and analytical evaluation and consolidation into a risk rating using predefined classes and scoring criteria. Since 2023 the analysis has been extended to include social and governance aspects, and an internal “ESG Risk Assessment and Management” regulation has been adopted, setting out the principles and metrics the Group must follow when assessing environmental, social and governance risks for new operations.
ESG-related risks are also managed in the areas of reputational risk, non-compliance risk and the risks of money laundering and terrorist financing. In fact the Group's methodology for the assessment of the reputational risk of transactions includes the use of indicators to evaluate risks related to ethics and integrity, as well as social and environmental concerns.
Fully aware of the importance of climate change, we closely monitor emerging climate-related risks, both in terms of potential economic and financial impacts and reputational risks. For this reason, CDP Group has voluntarily disclosed climate-related information based on the pillars defined by the Task Force on Climate-related Financial Disclosures (TCFD), the international body tasked with monitoring and promoting financial market stability.