RISK MANAGEMENT
ENTERPRISE RISK MANAGEMENT MODEL
The Group has adopted an integrated Enterprise Risk Manage- ment (ERM) system based on international best practices. The system involves Moncler s entire organization and govern- ance bodies, each acting within the scope of their respective spheres of competence. In line with the field s guidelines and best practices of reference, the main objective of ERM is to en- sure the effective identification, measurement, management, and monitoring of risks.
The ERM model covers all types of risk that can potential- ly affect the achievement of strategic objectives, impair com- pany assets, and/or undermine the value of the Brand. ERM is incorporated into strategic decisions and key decision-mak- ing processes.
Risks may be internal or external depending on whether they are identified within or outside the Company. In particu- lar, external risks are linked to industry and market situations, as well as to the stakeholders perception of how Moncler op- erates. 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 category.
Business risks are those related to the sector in which the Group operates, its operations, organizational structure, information systems, and control and reporting processes.
Compliance risks are generally associated with business conduct, and relate to breaches of laws and regulations appli- cable to Company operations at the 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 and commercial 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, de- signed to eliminate the risk, minimize its likelihood of oc- curring, or contain its impact in the event of occurrence. As for external risks, the ERM model aims to monitor them and
mitigate their impact in the event of occurrence, for instance through insurance policies.
The risk assessment identifies all the risks and their risk owners, responsible for managing the risk itself and the cor- responding control system, and for implementing or improv- ing mitigation measures. All risks, their assessment by the internal risk control system, and the efforts taken to miti- gate them are recorded in a Risks Register, which is updated regularly with the 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 pe- riodically 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.
In 2020, within the field of ERM, two activities of note were completed with the collaboration of the risk owners: the COVID-19-driven Risk Assessment, which identified and assessed 33 risks on which the pandemic has had a signifi- cant impact, with input from the regional liaison officers; and finalizing a follow-up to the mitigation efforts implemented or planned for risks which as of December 2019 exceeded the Company s risk appetite (Risk Assessment Business as usual). A specific assessment was also carried out with the Digital, En- gagement & Transformation unit in order to look into the risks of Digital processes.
Further to these activities, the ERM portfolio was updat- ed to include 151 risks (140 in 2019).
In addition, the Risks Register of every Region where Moncler operates is in the process of being updated with the support of local management, to make sure risks are evenly assessed and managed in light of the changed socio-econom- ic context.
The results of ERM activities are presented half-yearly to the Control, Risks and Sustainability Committee and the Board of Directors, as part of the report by the Head of Inter- nal Audit on the adequacy and effectiveness of the Internal Control and Risk Management System. Moncler s ERM system involves the following governance bodies: the Board of Directors, which defines guidelines and as-
sesses the adequacy of the internal control and risk man- agement system (ICRMS) at least once a year;
the Control, Risks, and Sustainability Committee, which supports the Board of Directors in its assessment and de- cisions concerning the risk management system;
the Director in charge of the ICRMS, who is responsible for establishing and maintaining the effectiveness of the
53CONSOLIDATED NON FINANCIAL STATEMENT 202052 RESPONSIBLE BUSINESS MANAGEMENT