Internal control and risk management system

The risks described below stem from a consideration of the features of Ansaldo STS group’s market (demand and offer) and business, together with the key findings of the updated risk assessment process.

Risk assessment aims at identifying and evaluating the main risks that could have an impact on achieving objectives, for those processes identified as relevant, and the related mitigating actions, as well as defining additional actions to be taken to further reduce the risk or improve process performance.

Ansaldo STS’s internal control and risk management system provides for the involvement of the following officers:

  • Board of directors;
  • Director responsible for the internal control and risk management system;
  • Risk and control committee;
  • Internal Audit Manager;
  • Manager in charge of financial reporting pursuant to Law no. 262/2005;
  • Supervisory body set up in implementation of Legislative decree no. 231 of 8 June 2001;
  • Board of statutory auditors.

With the assistance of the risk and control committee and also on the basis of the activities of the director responsible for the internal control and risk management system, the board of directors defines guidelines for this system, so that the main risks to which the company is exposed are correctly identified and adequately measured, managed and monitored. It also determines the degree of compatibility of such risks with business management in line with the strategic objectives identified. In addition, within the scope of the definition of strategic business and financial plans, the board of directors defines the nature and level of risks, in accordance with the company’s strategic objectives.

The methodological approach taken to evaluate and manage the internal control and risk management system refers to the internationally recognized Enterprise Risk Management framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO report).

The Internal Audit unit’s audit plan was approved by the board of directors as required by Borsa Italiana’s code of conduct for listed companies and the unit manager prepares regular reports for the risk and control committee.

Specifically, audit procedures performed in 2016 covered contract, engineering and development, purchases and compliance of certain significant procedures for compliance purposes and monitoring progress of the actions plans drawn up as a result of the audit work.

Anti-corruption and the prevention of corporate crimes

In order to ensure that the conduct of all those operating on the company’s behalf or in its interests is always consistent with the principles of correctness and transparency in business dealings and company activities, Ansaldo STS has adopted an Organizational, management and control model (the “Model”) in line with the requirements of Legislative decree no. 231/01 and the guidelines issued by Confindustria, Italy’s main Organization representing Italian manufacturing and service companies.

The code of ethics is an integral part of this Model. The company has also set up a supervisory body to monitor application of the Model.

The Company ensures that all employees are completely familiar with the Model by providing them with informative reports when it is updated. Employees working in risk areas, as well as executives and managers, sign periodic statements to certify the respect of the Model and, when needed, to describe the most significant relationships with customers and representatives of public administration.

The Model was most recently updated with the board of directors’ resolution of 27 February 201710. This latest update was adopted mainly in order to introduce (i) the offence of organ trafficking provided for by Italian Law 236 of 11 December 2016, which introduced art. 601 bis to the Italian Criminal Code, in Special Part “F” of the Model dedicated to “Conspiracy” and (ii) the new offence of unlawful brokerage and labor exploitation provided for by art. 25-quinquies of Italian Legislative decree 231/01, introduced by Italian Law 199 of 29 October 2016 by amendment of art. 603 bis of the Italian Criminal Code, to Special Part “C1” of the Model dedicated to “Offences of employing citizens of third-party countries whose stay is irregular and the reduction to slavery or its maintenance”.

The Model is available on the company’s web site.

Ansaldo STS S.p.A.’s supervisory body has several members, including two external members, one of whom serves as Chairman, and both of whom were selected among academics and professionals with demonstrated expertise and experience in legal, economic and financial issues, as well as one internal member who is the interim General Counsel & Compliance manager.

The board of directors approved the current composition on 16 May 2016 after expiration of the three-year appointment of the supervisory body, so all previously appointed members of the body were confirmed for another three years. Any conduct contrasting with the ethical principles described in the code of ethics or the indications in the Organizational, management and control model pursuant to Legislative decree no. 231/01 can be anonymously reported to the supervisory body, which evaluates the reports in accordance with the relevant company procedure currently in place.

In this respect, in 2016, no reports were made and no sanctions were imposed following violations pursuant to Legislative decree no. 231/01.

10. For additional details, reference should be made to the “Directors’ report on the corporate governance system and the implementation of the code of conduct for listed companies for 2016”.