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ENTERPRISE RISK MANAGEMENT MODEL

The Group has adopted an integrated Enterprise Risk Management (ERM) model based on international best practices. The system involves Moncler’s entire organisation and governance bodies, each acting within the scope of its respective competence. In line with the field’s guidelines and best practices of reference, the main objective of ERM is to ensure the effective identification, measurement, management, and monitoring of risks.
The ERM model covers all types of risk that can potentially affect the achievement of strategic objectives, impair company assets, and/or undermine the value of the Brand. ERM is incorporated into strategic decisions and key decision-making processes.

 

Risks may be internal or external depending on whether they are identified within or outside the Company. In particular, external risks are linked to industry and market situations, as well as to the stakeholders’ perception of how Moncler operates. Moncler’s ERM model divides risks into four categories:

 

• strategic risk;
• business risk;
• compliance risk;
• financial risk.

 

Strategic risks relate to changes in business or to inadequate responses to changes in the competitive environment and the Company’s business development activities. Sustainability risks may fall within this risk category.

 

Business risks are those related to the sector in which the Group operates, to its operations, organisational structure, information systems and control and reporting processes.

Compliance risks are generally associated with business conduct, and relate to breaches of laws and regulations applicable to Company operations at national and international level, as well as to the Code of Ethics and violations of internal procedures.

 

Financial risks are those related to the Group’s financial management and specifically to: liquidity, foreign exchange, interest rates and financial counterparties in financial transactions.

 

With regard to internal risks, the objective of the ERM model is to manage them through specific prevention and control measures incorporated into Company processes, designed to eliminate the risk, or minimise its likelihood of occurrence, or contain its impact in the event of occurrence. With regard to external risks, the ERM model aims to monitor them and mitigate their impact in the event of any occurrence, for instance through insurance policies.

 

The risk assessment identifies all the risks and a ‘risk owner’ responsible for managing the risk itself and the related control system, and for implementing or improving mitigation measures. All risks, the assessment of the relevant internal control system and related mitigation actions are recorded in a Risks Register, which is updated regularly (in concert with risk owners) on the basis of an annual plan approved by the Board of Directors with the support of the Control, Risks, and Sustainability Committee. The plan is periodically updated to include any new elements of risk and/or to reflect any increases in the likelihood of occurrences or in the extent of impacts.
Specifically, in 2018, the ERM model was updated both with new assessments

targeted at the Digital, Investor Relations and Marketing & Communications areas, and with a detailed review of the risks associated with the Retail, Wholesale, Operations (with a focus on the supply chain), Logistics, Production site in Romania, IT & Cyber Risk, and Product Development areas, and at business support processes of the Administration and Control, Treasury, Human Resources and Legal divisions.
The results of ERM activities are presented half-yearly by the Control, Risks, and Sustainability Committee and by the Board of Directors, as part of the report by the Head of the Internal Audit division on the suitability and effectiveness of the Internal Control and Risk Management System (ICRMS).
Moncler’s ERM system involves the following governance bodies:

• the Board of Directors, which defines guidelines and assesses the suitability of the ICRMS at least once a year;
• the Control, Risks, and Sustainability Committee, which supports the Board of Directors in its assessment and decisions concerning the risk management system;
• the Director in charge of the ICRMS, who is responsible for establishing and maintaining the effectiveness of the system itself as per the indications and guidelines defined by the Board of Directors in collaboration with the Control, Risks, and Sustainability Committee;
• the Head of the Group Internal Audit division, tasked with verifying the performance and suitability of the ICRMS, and coordinating the ERM process;
• the Board of Statutory Auditors, which oversees the effectiveness of the ICRMS.
In December 2018, the ERM portfolio comprised 139 risks.

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