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Identification, measurement and continuous monitoring: three key elements that guide management of the risks of our activities
In order to guarantee the long-term stability and continuity of the organisation, the CDP Group has implemented specific processes aimed at managing and monitoring the risks associated with the activities it carries out. This management system is reflected in the internal regulations of the Group -such as our Code of Ethics- and those of the subsidiaries subject to its management and coordination.
Specifically, the risks associated with the activities of the CDP Group are subject to scrutiny over three levels: starting from the first level checks carried out by the operating units, the Chief Risk Officer, through the second level checks, ensures oversight of the Group's overall risk profile, defining the methodologies and monitoring exposures to the various types of risk, and his clear representation at the highest operating level and the Board of Directors, while Internal Auditing assesses the suitability of the internal monitoring system to ensure its effectiveness and efficiency. The entire risk monitoring process, in line with the best reference practices, is divided into the following phases:
The different types of risk are defined within the Group Risk Policy, which is approved by the Board of Directors and updated every six months, and broken down by Risk Regulation and associated documents, each of which relates to a specific risk category.
The Risk Policy represents the Group's Risk Appetite Framework, i.e. the key instrument, by means of which the Board of Directors defines CDP’s propensity to risk, the tolerance thresholds, the risk limits, the risk governance policies and the organisational processes.
Within the overall internal regulatory framework on risk management, aspects related to the management of risks of a social, environmental and financial nature are also considered. CDP Group is strongly committed to making responsible investment decisions in compliance with the changes in the reference legislation and operates in such a way as to be constantly improving its procedures and its transparency.
CDP Group adopts a prudent approach in monitoring its risks and attaches particular importance to the potential risks related to the ethical, social, environmental and governance issues associated with investment and shareholding decisions. It does this by carrying out due diligence for reputational purposes to ensure that its risk management is in line with the standards adopted by similar international organisations.
In this regard, as part of the due diligence process for transactions governed by specific internal policies, where necessary the CDP Group acquires formal documentation proving that there are no negative environmental and social impacts or that initiatives have been adopted in mitigation of such impacts, which is one of the elements of the overall evaluation of the initiatives themselves.
In addition, CDP encourages companies to implement effective ways to identify and manage social and environmental factors affecting their business and the broader society, in order to promote long-term sustainability. Within this perspective, in order to improve their ESG risk management procedures some CDP Group companies have adopted some of the main international standards, such as: