Risk management

We have set up a structured risk management system based on complete mapping – in financial and operating terms – that allows us to identify, measure, monitor and mitigate risks.

Since it was established, our company has adopted a well-structured approach to managing risks that can have an impact on the creation of value. Through a dedicated function, we apply a standardised and integrated model to all companies in our group to identify, assess, manage and control risks.

Overview of Enterprise Risk Management Model


Our Enterprise Risk Management (ERM) Department oversees the Group’s integrated business risk management process. The ERM activities focus on the definition, maintenance and evolution of a homogeneous, transversal model for assessing the risks, assign risk priority, ensuring consolidation of the mitigation actions and developing a reporting system.
The ERM methodology adopted by the Italgas Group is in line with the reference models and the existing international best practices (in particular, the 2017 COSO framework relative to the Enterprise Risk Management, issued by the Committee of Sponsoring Organizations of the Treadway Commission, and ISO 31000:2018).

The review on company’s risk exposure (i.e. process for the identification, assessment, measurement and management of the risks) is carried out on  quarterly basis, on the basis of the importance of the risk and any changes in context.

The activities directly involve all business departments through dedicated meetings that make it possible to update the information on the description, significance and management of the risks already existing in the portfolio, and the detection of new emerging risks. These activities are carried out in a way that covers the entire scope of the Group and all the potential applicable events.

In order to ensure the correct assessment and prioritisation of risk events, the assessment is carried out considering the following potential types of impact: economic-financial; operative; legal, governance and compliance; environment, health and safety; reputation and market.

The ERM model establishes an integrated, cross- cutting and dynamic risk assessment that enhances the management systems already existing in the individual business processes. Each risk is described and assessed using a specific scoring scales in terms of likelihood and magnitude of potential impact that sets out the thresholds of relevance for the Group and enable to attribute a “rating” to each risk, thereby ensuring risk prioritization.
For all risks, the risk ownerships are identified. Management strategies are defined and drilled down into specific actions for dealing with the risk and establishing the relative implementation time.

With reference to financial, regulation, strategic initiatives and execution risks, the Enterprise Risk Management Department, in coordination with all relevant departments, carries out a specific in-depth analysis of risks, opportunities and uncertainties related to the Strategic Plan. The analysis is conducted using a proprietary Monte Carlo simulation model that uses the information gathered on risks, opportunities and volatility and on related correlations to generate a multitude of alternative scenarios for the evolution of the variables underlying the Strategic Plan and evaluates their overall impact on the value drivers.

In addition, specific sensitivity analyses and stress tests (“what if” scenarios) both on financial and non-financial risks are identified in relation to the reference context on which the Strategic Plan is based, and the impacts that these scenarios would have on the strategic agenda are then assessed.

The analysis allows estimation of the overall volatility of the defined economic and financial targets and evaluation of the level of resilience of the Strategic Plan and enables the definition of Risk Appetite Levels for the 4 key risk categories (Macro-economic and Financial, Regulatory Evolution, Strategic Initiatives and Execution). Risk Appetite Levels (High, Medium, Low) are quantitatively defined on the basis of the “worst/best case impacts” of each risk category on Group Strategic Plan financial targets:

  • Macro-economic and Financial Risk Category: “High” Risk Appetite level, due to the uncertainty of the external context that opens to wide scenarios on the evolution of key external financial variables impacting Group targets (i.e. government bond yields, interest rates, inflation rate) over Strategic Plan timeframe, also considering the potential effects on allowed revenues.
  • Regulatory Evolution Risk Category: “Medium” Risk Appetite level, mainly due to the potential update in the medium term on regulated parameters that could impact on allowed revenues.
  • Strategic Initiatives Risk Category: “Medium” Risk Appetite level, mainly due to gas distribution tenders process timeframe and related outcomes.
  • Execution Risk Category: “Medium” Risk Appetite level, mainly due to the recent increase of the scope of the Group (acquisition of Depa Infrastructure).

The “Risk Analysis” section of the “Strategic Plan” document, which has been approved by Italgas S.p.A.’s Board of Directors, focuses on the output of this analysis including the Risk Appetite Levels related to each risk category (Macro-economic and Financial, Regulatory Evolution, Strategic initiatives and Execution).

ERM and Sustainability functions work together to ensure the integration of materiality analysis results with the Group risk assessment, in a two-way perspective: i) materiality analysis results are used as input to ERM processes to support the identification of risks across the Organization; ii) risks identified and assessed are linked with each applicable material issue resulting from the materiality analysis.

The Enterprise Risk Management Department draws up specific reports on the identification, assessment and management of the risks and shares them with the different company levels. The risks are updated once a quarter, half-year or year, depending on their relevance.
The results found in relation to the main risks and related management plans are presented to the Control, Risk and Related Party Transactions Committee at each updating. Moreover, the mapping of risks and the relative management strategies are presented periodically to the Board of Statutory Auditors and the Supervisory Body of Italgas and to the Boards of Statutory Auditors and the Supervisory Bodies of the Subsidiaries.

Since Enterprise Risk Management process is an integral part of Group Management System, it is subject to internal audit on annual basis. Moreover, Enterprise Risk Management process is externally audited during the process of renewal of Anti-Corruption and ISO QHSE certifications of Group Entities.


Strategic/Business Risks

Changes in Regulation and legislation



Risk of changes in the regulatory and institutional context in Europe
or nationally affecting the natural gas sector. Risk of a penalising update of the rate of return on net invested capital recognised by the Regulator. Focus on Greece: Risk of review by the Greek Regulator of the investment and tariff plans submitted for approval.


Main methods of management

Structures dedicated to the oversight of regulations, legislation and their future plans for evolution including at European level

Active participation in the consultations called by the Regulator, sharing corporate positions and/or proposals for defining, updating and implementing clear and transparent regulation criteria

Active participation in consultations called by the Italian

Government or by European

Community organisations on relevant topics, including the Taxonomy

Guidance to define the associative sector positions

Climate Change



Physical Risk: increased frequency of extremely intense natural events in the places where Italgas operates (more or less prolonged unavailability of assets and infrastructure, increase in repair and insurance costs, service interruption, etc.) with a negative impact on costs, revenues and level of service

Emerging risk: Physical Risk: an increase in average temperatures in the areas where Italgas operates with a possible negative impact on the number of active re-delivery points served and, consequently, on revenues

Emerging risk: Transition Risk: changes in the legislative and regulatory context in terms of greenhouse gas, with the objective of limiting emissions, for instance by introducing measures that require natural gas distributors to acquire certificates to cover emissions, with a negative impact on costs.

Emerging risk: Transition risk: technological evolution that may have a negative impact on the number of active re-delivery points served with a negative impact on revenues and the level of expected investments

Emerging risk: Transition Risk: uncertainty of the role of natural gas in the future energy mix with a negative impact on costs, revenues and level of expected investments

Main methods of management

Operational countermeasures as described in the “Service continuity:  malfunctioning, accidents or extraordinary events” risk

Targets for reducing net greenhouse gas emissions56:
I) by 2030: reduction of Scope 1 & 2 emissions by 42% and reduction of Scope 3 emissions by 33%, compared to 2020 values
II) by 2050, the target of Net Carbon Zero

Italgas, in the absence of a specific reference for the Oil&Gas sector within the SBTi initiative, nonetheless aims to align itself with the references expressed by SBTi for the cross-sector long-terms target for Net-Zero (90% emissions reduction target). In light of this threshold, the Group is defining approaches and initiatives aimed at decarbonising its operations and supply chain; any remaining S1&2 and S3 emissions that could not be reduced at the net-zero target by 2050 will be neutralized also thanks to the use of carbon removal initiatives (Offsetting, e.g., purchasing carbon credits and/or Investing in permanent carbon removal)

Target to reduce net energy consumption by 33% by 2030, compared to 2020 values

Use of Picarro Surveyor technology, currently the most advanced technology in the field of gas network monitoring activities, with significant benefits in terms of speed of execution, extent of the areas being controlled and three times greater sensitivity of detection of gas in the air than those currently used by sector operators (parts per billion versus parts per million)

Adoption of internal leakage repair SLAs stricter than those defined by the Regulator

Process of converting the network into digital infrastructure to enable the distribution of gas other than methane, such as hydrogen, biomethane and e-gas

Development, implementation and adoption of digital applications for the remote control of network and facility construction, development and maintenance worksites

Conversion to methane of the distribution networks supplied by LPG, with resulting reduction in emissions compared to the current configuration

Actions to modernise the network (investments in maintenance, replacement of cast iron pipes with mechanical joints, clean up upright columns and brackets)

Promotion of responsible business practices, by joining the UN Global Compact and the OGMP 2.0 of the UNEP

Guidance to define the associative sector positions

Active participation in consultations called by the government or by European community organisations on relevant topics

Active participation in the activities of sector associations to oversee technological changes

Carrying out energy efficiency projects through the subsidiary Geoside

Investments intended to increase the Group’s presence in the water and energy efficiency sectors

Promotion of sustainable mobility

Development of power-to-gas technology powered by renewable energy in order to produce renewable gases that can be used in the existing networks

Network and facility analysis initiatives for the evaluation of their adequacy and of interventions intended to enable the distribution of gas other than methane, such as hydrogen, biomethane and e-gas


Climate Risk Assessment – Physical and Transitional Risks

Climate change risks and opportunities are integrated into Italgas Enterprise Risk Management System (see “Overview of Enterprise Risk Management Model”).

To ease risk identification related to Climate Change, Italgas performs a specific analysis based on physical and transition scenarios identifying a list of risk/opportunity events applicable to Italgas. Climate Risk / Opportunity analysis involves ERM Function,  Strategy Function, Sustainability Function as well as the relevant Risk Owners. Climate Change Risk and Opportunities are reported to Control and Risk Committee, Sustainability Committee and Board of Directors.

The types of climate-related risk included in risk assessment are both Physical risks (Acute, such as the increase in frequency and intensity of extreme natural events, and Chronic, such as increase in average temperatures), and Transition risks (Current and Emerging Regulation, Technology, Legal, Market, Reputation), covering all the stages of the value chain (e.g. suppliers, operations, final users). Examples: risks related to suppliers, service level and regulatory obligations, impacts on third parties assets, service interruption as a result of natural events, risks related to chronic change to physical parameters where Italgas operates.

Given the long timeframe that has to be considered to fully take into the account of occurrence and/or impact of such events,  climate risks and opportunities are assessed over: i) short term (1 year) timeframe, ii) medium term (Strategic Plan 7-years) timeframe and iii) long term (until 2050) timeframe. Climate risks/opportunities are assessed with reference to the Strategic Plan assumptions flexed to account for possible alternative evolution of scenarios.

Regarding Physical Climate Change Risks, our climate scenario analysis is based on a third-party climate model that allows to obtain the evolution of main physical parameters, up to 2050, under RCP 1.9, 2.6, 4.5, 8.5 scenarios in all the local areas (up to municipal level) already served by Italgas or in those areas the Group plans to serve in the future. Physical parameters considered by the model include for example heating degree days and days with heavy rainfalls. Their potential impacts are then assessed on key business variables (e.g. active redelivery points), as well as considering potential damages to Group Top Locations and overall gas infrastructure (upstream, own operations and downstream relative to distribution).

Regarding Transition Climate Change risks, they are analyzed on several third parties climate and energy related scenarios with each Process Owner, as for Italgas ERM model described in the section “Overview of Enterprise Risk Management Model”. In particular, the following risks have been considered: risks associated to potential changes in National and European regulation, risks associated to non-compliance with regulation or failure to intercept/transpose new regulation falling under the scope of application, risks associated with technological changes, risks related to energy efficiency certificates, risks associated to environmental protection. Considerations of impacts include the overall gas infrastructure (upstream, own operations and downstream relative to distribution).


Adaptation Plan

Coherently with Group Strategic Plan targets and Climate scenario analysis outcomes, the Group has identified and is currently implementing a set of specific actions that enable the adaptation to climate change:

Network: mitigating impacts and/or reducing time of intervention in case of occurrence of extreme natural events

  • Replacement of grey cast iron with hemp and lead joints

Timeline: Completion expected in 2022 (subject to permitting)
Reference: TCFD Report – Driving innovation for energy transition – pag. 14. The repurposing of the network sees, among other things, the full replacement of grey cast iron and other obsolete materials pipes with new ones to prepare the network to handle different types and blends of gases and be more effective in coupling with the consequences of climate change remote controls in case of occurrence of extreme climate events, mitigating impacts and/ or reducing time of intervention (e.g., remotely securing network portions in case of floods, fires, earthquakes).

  • DANA – Digital Advanced Network Automation – the command-and-control system of the network of the future
    – 2021: Project Launch (status: completed);
    – 2022: I
    nstallation on 4 distribution plant (status: completed);
    – 2022: Installation on 10 distribution plant Italgas and on 63 distribution plant MEDEA (status: in progress);
    – 2023-2024: roll out plan to all Italgas plants
    Reference: Integrated Annual Report – pag. 136
    The command-and-control system unlocks 3 major benefits: i) Ensure the monitoring of a distributed system in which physical variables are interdependent; ii) Enable remote management with commands on main processes of network and plants and increase the efficiency of the governed processes and the flexibility of the network; iii) Enable management of renewable gases (e.g., biomethane, hydrogen). It is a practical example of Italgas’ adaptation on climate risks.
  • Smart maintenance initiative 
    – 2022: release of an initial prototype (in progress);
    20232024: roll out plan to all Italgas distribution plants
    Reference: TCFD Report – Driving innovation for energy – pag. 14-15
    Digitization increases efficiency, improves safety, network management and the quality of the service, enables predictive maintenance, for more effective control of the operating parameters, and helps to guarantee operation under any conditions. In 2021, the development of a Geographic Information System (GIS) was started in collaboration with Picarro, of a GIS model for asset management used to design smart maintenance for the Italgas networks, with a view to extension to Group level thereafter. Continuing with the enabling of smart maintenance, new solutions have been introduced based on machine learning and AI for predictive analysis and the optimisation of the function of critical components of the network, such as smart meters and the odorisation stations.
  • Radio Frequency Identification Markers in new networks  
    2019: first installation (completed);
    – currently ongoing (19.343 markers already installed)
    Reference: Integrated Annual Report – pag. 160
    The new distribution networks are equipped with Rfid markers, again positioned inside the excavation at an average step of 1 every 50 metres, which allow for the traceability and localisation of the pipes directly from the road level without any need for invasive interventions in the subsoil and consequent interference with traffic. In case of adverse meteorological phenomena impacting the network, this represents an effective adaptation tool allowing to intervene quickly.

Real Estate: reducing office energy consumptions, mitigating the impact of an increase of annual average temperature (that would otherwise result in an increase of energy consumption)

  • Building renovation
    Timeline: 2023-2024
    Reference: Integrated Annual Report – pag. 144
    The virtuous reduction of civil consumption, now an integral part of real estate management, will continue during 2023 along the following lines: –the process to renew building stock; –installation of photovoltaic systems to increase the amount of electricity self-produced and consumed on site; –extension to all the Group’s operating sites of the ability to monitor consumption in real time and analyse it using the proprietary platform developed by Geoside, thanks to introduction of smart sensors.

Water leakages: reducing water leakages, mitigating the impact of an increase in average annual temperature (which would otherwise lead to a decrease in the volume of available water)

  • Digital transformation for Water Business
    Timeline: 2023-2029
    Reference: Strategic Plan 2023-2029 – pag. 29-32
    Water smart meters, network (DMAs) balancing, real-time monitoring and predictive maintenance to improve network operational and energy efficiency and reduce water leakages. In 2023, installation of water smart meters, including real-time pressure sensors, began throughout the network. The subsequent subdivision of the whole network map – necessary to collect precise data on water leakages – will be completed within 2024.

Industrial consumption: energy auto-production to mitigate effects on energy insecurity due to the occurrence of extreme climate events

  • Installation of photovoltaic plants
    Timeline: 2023
    Reference: Integrated Annual Report – pag. 142
    In 2023, Italgas Reti plans to replace traditional circulators with inverter-driven electro- circulators inside thermal power plants for preheating, revamp existing photovoltaic plants with more efficient modules, as well as new installations of photovoltaic plants on both IPRMs and GRFDs, to ensure the self-production of the electricity needed to satisfy the needs of the new digitised plants.

Risks associated with the development and awarding of area tenders for the gas distribution service



Risk of not being awarded concessions in the planned areas, or being awarded concessions with less favourable conditions than previously.

Risk of higher management costs borne by the Group with respect to its operating standards in case of concessions awarded in ATEMs (Minimum Territorial Areas) previously managed entirely or partially by other operators.

Risk of legal and/or arbitration disputes with possible negative effects on the business and the equity, economic and financial position of the Italgas Group deriving from the complexity of the legislation that governs the expiry of the concessions held by Italgas.

Risk that the redemption value of the concessions for which, following the assignment process, a third party is an assignee is lower than the value of the RAB, with possible negative effects on the business and on the equity, economic and financial position of Italgas.

Main methods of management

The existing legislation states that, in the event of failure to be awarded concessions previously managed, the outgoing operator is entitled to the redemption value for the networks it owns.

Specific procedures that govern the pre-tender activities, including calculation of the redemption value, and participation in area tenders

Monitoring of legislative changes (national, regional, local) and evaluation of the potential impacts on the tender process

Planning of the Tender calendar and the bidding strategy integrated into the Group’s Strategic Plan.

Critical analysis of the quality of the tender bid and implementation of improvement measures, including through use of external experts, organisations and universities


Risks related to energy efficiency certificates



Potential risk of economic loss due both to the possible negative difference recorded between the mean purchase value of the Energy Efficiency Certificates purchased and the recognised tariff-based fee at the end of each year of obligation and the failure to achieve the targets annually set


Main methods of management

Established a specific provision to cover the liabilities associated with the Energy Efficiency Certificates

Process for the acquisition of Energy Efficiency Certificates and the management of related obligations

Monitoring of legislative changes

Active participation in working groups and development of sector position papers with proposals for guidelines for reviewing the rules of the EEC system

Optimised purchasing strategy through access to the market, evaluation and development of any reports for bilateral agreements, periodic reporting to company management

Presence in energy efficiency sectors through the development of projects with partial reduction of the EEC short position

Financial Risks

Credit Risk



Risk of potential losses arising from counterparties failing to fulfil their obligations or delayed payment of amounts owed with negative effects on the financial results and financial position of the Italgas Group


Main methods of management

Rules for user access to the gas distribution service established by the Regulator and set out in the Network Codes, namely, in documents that establish, for each type of service, the rules regulating the rights and obligations of the parties involved in the process of providing said services, and lay down contractual conditions that reduce the risk of non-compliance by customers, such as the provision of bank or insurance guarantees on first request

Analysis and monitoring of the credit portfolio

Assessments of initiatives for outsourcing to external companies specialised in credit recovery.

Monthly monitoring of the activities and performance of the appointed companies

In Italy, as at 31 December 2022 there were no significant credit risks. Note that on average, 98.4% of trade receivables relating to gas distribution are settled by the due date and over 99.7% within the following 4 days, confirming the strong reliability of the customers

In Greece, as at 31 December 2022 there were no significant credit risks. Note that on average, 83.2% of trade receivables relating to gas distribution are settled by the due date and over 90.8% within the following 4 days, confirming the strong reliability of the customers.

Changes in interest rates, inflation and deflation



Risk of fluctuations in interest rates, impacting the market value of the Company’s financial assets and liabilities and its net financial expense. The risk that an extended period of inflation lower than the Group’s forecasts could have adverse effects in the long-term on the RAB value and expected regulated revenues. Risk of an unexpected increase in the inflation rate with possible adverse effects on expected costs


Main methods of management

Process for the preparation and monitoring of the financial and management plan, control and reporting of Financial Risks

Financial planning activities with a time frame of 7 years, carried out annually

Maintenance of a debt ratio between a fixed rate and floating rate to minimise the risk of rising interest rates (as at 31 December 2022, 90.8% of the gross financial debt was at fixed rate and 9.2% at floating rate)

Use of a diverse mix of external financial resources (bonds subscribed by institutional investors, syndicated loans with banks and other financial institutions, in the form of medium-to-longterm loans and bank credit lines at interest rates indexed to benchmark market rates, in particular the Europe Interbank Offered Rate [Euribor])

Monitoring of the main economic and financial indicators, including financial structure indices used by rating agencies, liquidity indicators and liquidity buffers, risk indicators of counterparty liabilities, and of certain key parameters, such as the ratio between debt and the RAB, indicators of debt mix/composition (fixed/variable, short/long, used/agreed)

Liquidity Risk



Risk that new financial resources may not be available (funding liquidity risk) or that the company may be unable to convert assets into cash on the market (asset liquidity risk), meaning that it cannot meet its payment commitments. This may affect profit or loss should the company incur extra costs to meet its commitments or, in extreme cases, lead to insolvency and threaten the company’s future as a going concern


Main methods of management

Process for the preparation and monitoring of the financial and management plan, and control and reporting of financial risks

Financial planning activities with a time frame of 7 years, carried out annually

Adequate level of cash held in current accounts and fixed-term deposits with leading banks

The EMTN programme, in addition to funding from the banking system, which presently allows issue of the remaining bonds worth a nominal € 2.0 billion to be placed with institutional investors

Monitoring of the main economic and financial indicators, including financial structure indices used by rating agencies, liquidity indicators and liquidity buffers, risk indicators of counterparty liabilities, and of certain key parameters, such as the ratio between debt and the RAB, indicators of debt mix/composition (fixed/variable, short/long, used/agreed)

Credit rating risk



Risk of a downgrade in Italgas’ credit rating due to worsening in the economic and financial parameters or due to a downgrade of the rating of the Italian Republic, which, based on the methodologies adopted by the rating agencies, could trigger a downward adjustment in Italgas’ rating


Main methods of management

Process for the preparation and monitoring of the financial and management plan, and control and reporting of financial risks

Financial planning activities with a time frame of 7 years and carried out annually

Monitoring of the main economic and financial indicators, including financial structure indices used by rating agencies, liquidity indicators and liquidity buffers, risk indicators of counterparty liabilities, and of certain key parameters, such as the ratio between debt and the RAB, indicators of debt mix/composition (fixed/variable, short/long, used/agreed)

Constant dialogue with rating agencies

Debt covenant and default risk



Risk of failure to comply with financial covenants for existing loans (in some cases only when this non-compliance is not remedied within a set time period, and the occurrence of other events, such as cross-default events, some of which are subject to specific threshold values), which could result in Italgas’ failure to comply and could trigger the early repayment of the relative loan


Main methods of management

Absence of financial covenants and/or collateral in the loan agreements (as at 31 December 2022, there were no loan agreements with these characteristics, except for the EIB loan taken out by Toscana Energia, for an original nominal amount of € 90 million and some credit lines granted to Greek operating companies that require compliance with certain financial covenants)

The issue of bonds as part of the Euro Medium Term Notes programme, requiring compliance with covenants that reflect international market practices regarding, inter alia, negative pledge and pari passu clauses

Monitoring of compliance with the following types of contractual clauses:
(i) negative pledge undertakings, pursuant to which Italgas and its subsidiaries are subject to limitations regarding the creation of real rights of guarantee or other restrictions concerning all or part of the respective assets, shares or goods;
(ii) pari passu and change of control clauses;
(iii) limitations on some extraordinary transactions that the company and its subsidiaries may carry out (as at 31 December 2022, these commitments appear to have been respected)

Operational Risks

Anomalies in smart meter performance



Risk of increased levels of malfunctioning of smart meters with lost/ failed reading of the use and/or requiring replacement or regeneration


Main methods of management

Maintenance of an adequate provision to cover the liabilities generated by the costs arising from malfunctioning

Issue of adequate guarantees by the suppliers of materials

“SmartTracker” Digital Factory application for the tracking and management of smart meters throughout the entire life cycle

Plan to replace and/or repair meters with function anomalies

Operating centres for the regeneration of Smart Meters with anomalies

Audits on suppliers and supply tests

Update of technical specifications, including in consideration of technology changes

Adoption in the field of smart meters equipped with NB-IoT communication technology

Project for the development of latest generation smart meters, also compatible with renewable gas like biomethane and hydrogen and patented by Italgas


Service continuity: malfunctioning, accidents or extraordinary events



Risks of malfunctioning and unforeseeable distribution service disruptions from unintended events, such as accidents, breakdowns or malfunctioning of equipment or control systems, the underperformance of plants, and extraordinary events such as explosions, fires, earthquakes, landslides or other similar events beyond Italgas’ control


Main methods of management

Third Party Liability Insurance and Asset Protection coverage Procedures and systems for emergency management, emergency plans with measures defined to make facilities safe and guarantee  service continuity

Health and safety procedures, communication campaigns, training and meetings to raise awareness of and analyse the prevention of accidents, initiatives that also involve suppliers/

Integrated Centre for Supervision (ICS) active 24/7 which makes it possible to monitor the status of the network remotely using remote monitoring systems, manage requests for prompt intervention, identify the places that require intervention and monitor the progress of making conditions safe

Facility and asset safety and network monitoring systems

Introduction of DANA – Digital Advanced Network Automation – the network command and control system with 3 main advantages:
a) To ensure the monitoring of a distributed system in which physical variables are interdependent;
b) To enable remote management with commands on the main processes of the network and facilities and to increase the efficiency of the governed processes and the flexibility of the network; c) To enable the management of renewable gases (e.g. biomethane, hydrogen).

Smart Maintenance initiative: development and gradual adoption of a GIS model for asset management used to plan smart maintenance of the Italgas networks.

Planned search for leaks using the best systems and technologies (Picarro Surveyor) and with higher levels of annual coverage of the network inspected than the standards defined by the Regulator

Adoption of internal leakage repair SLAs stricter than those defined by the Regulator

Continuous modernisation of the network (investments in maintenance, replacement of cast iron pipes with mechanical joints, plans to clean up upright columns and brackets)

Prevention of potential damage to pipes caused by third parties (e.g. other sub-services)

Qualification procedures for third-party construction, engineering and works supervision companies, contractor monitoring

Digital Factory for the development of innovative solutions intended to digitise processes and improve the network operating and management activities and the quality of service

Cyber attacks



Risks of cyber attacks on the IT (Information Technology), OT (Operational Technology) and IoT (Internet of Things) sectors


Main methods of management

Specific insurance coverage of the risks related to cybersecurity

Cybersecurity organisational and operational model

Group Policy on Integrated Security, Resilience and Crisis Management

Models and procedures for business continuity, network and information security, and emergency and crisis management

Monitoring of the Group’s Bitsight cyber risk rating, currently positioned in an advanced range that corresponds to a high level of maturity of the cybersecurity frameworks

Adoption of conditional access solutions on the basis of certain risk factors (illegitimate accesses, accesses from unusual locations, etc.) and Multi-Factor-Authentication for the Group’s employees and most critical IT suppliers

Adoption of security measures to protect endpoints (antimalware) and e-mail through the implementation of antispam solutions (protection of mail from spam), anti spoofing solutions (protection from attacks that impersonate the address of the sender of a communication), advanced hunting (advanced analysis to proactively verify possible threats), safe link/safe attachment (protection from harmful links and attachments present in e-mails through simulation in a test environment, sandbox)

Specific training for Group employees on cyber risks, common vulnerabilities, phishing and spam

Possibility for Group employees to report suspected phishing e-mails (phishing alarm) to a team specifically appointed to analyse and manage these e-mails

Phishing simulations for Group employees intended to test and strengthen their ability to recognise malicious emails

Secure Product Development Lifecycle process which defines an operational and project approach in which the considerations and measures to prevent and mitigate cybersecurity risks are integrated from the very start of the procurement process and/or the development of hardware and software

Security measures to protect the network infrastructure from unauthorised alteration, disservices, incorrect applications and unauthorised data disclosure through firewall solutions, intrusion prevention systems, web application firewalls, anti DDoS (Distributed Denial of Service) systems, protection of Internet browsing (proxy) and network segmentation

Continuous real time monitoring, through Security Information and Event Management (SIEM) solutions, of IT and OT systems aimed at identifying and correlating events on monitored devices and acting accordingly where necessary

Periodic IT and OT vulnerability assessments and penetration tests performed by third parties

Definition and periodic updating of contract technical specifications, including in relation to cybersecurity

Leading sector suppliers that guarantee maximum levels of security and performance, the service levels of which are defined by contract and monitored

“Cybersecurity Awareness for third parties”, with which the suppliers of the Italgas Group must formally comply. It promotes the application of appropriate cybersecurity processes by third parties

Adoption of Cyber Threat Intelligence services aimed at proactively identifying new techniques used for attacks, monitoring the main players in threats and verifying any company data available outside the Group scope

Risks associated with the health and safety of people and environmental protection



Risk of incidents and/or injuries involving employees and partner companies. Risk that Italgas may incur costs or liability, including to a significant extent, arising from any environmental damage, including in consideration of changes in legislation on protecting the environment and the possible occurrence of disputes.

Main methods of management

Specific insurance policies for “individuals”, which cover both cases of professional and non-professional accidents, and death by illness

HSEQ system in compliance with the reference standards, certified according to international legislation for aspects of health, safety, environment, quality and energy efficiency, which envisages compliance audits carried out by the certification body

Research and technological innovation and actions and projects for the energy efficiency of processes, the improvement of plant safety conditions and the environmental recovery of former manufactured gas production sites

Monitoring of HSE legislation, formation and dissemination of applicable legislative oversight

Training on HSE issues and digital management system for courses (Learning Management System)

Digital applications for reporting and recording “near misses” and for waste management

Communication campaigns and meetings to raise awareness about safety and other HSE topics Reward systems for virtuous operating structures in terms of health and safety

Establishment of the Partners HSE Lab with training, information and workshop events with suppliers/contractors intended to raise awareness/create alignment on HSE topics

Internal procedures that involve specific measures with regard to suppliers/contractors in case of HSE non-compliance and reward system for virtuous behaviour (Contractor Safety Trophy)

Compliance audits on the HSEQ and ISO 37001 integrated system and technical audits on suppliers and contractors during qualification and normal activities

With particular reference to reclamation activities:
– Established a specific provision to cover the estimated liabilities in relation to the formalities required by the law in effect
– Reclamation process of contaminated sites, which defines the tasks, operating procedures and indications in operations of waste removal, land analysis, establishing safe conditions and/or reclamation of sites contaminated by previous activities
– Structure dedicated to monitoring the design and construction phases. Audits on sites being
reclaimed, carried out internally and by third parties, both during the works and for the final

Risks associated with human resources



Risks associated with the development of human resources, including risk of resources in key roles leaving, lack of technical and specialist know-how, increase in the age of company personnel, drop in the level of satisfaction and/or increase in workplace disputes


Main methods of management

Knowledge transfer system developed in the Italgas Digital Factory, which involves the video coding of operating activities and real-time instructions available via wearable devices

Refining of training processes, with a multimedia platform for planning, managing and accessing the various managerial, technical, HSEQ and digital training activities

Initiatives for the dissemination of the culture and digital knowledge (mapping of digital skills,
creation of Digital Ambassadors and training on digital topics)

Personnel scouting and recruitment process, performance management system and development plans for resources with a role-specific training programme

I-Grow Programme, Italgas’ graduate programme aimed at strengthening internal know-how in accordance with the principles of meritocracy and transparency, which provides for the acceleration of the development of transversal skills through induction paths, training programmes and structured job rotation paths

Succession plan for senior roles

Collaborations with Italian universities intended to anticipate talent acquisition

Organisational structures dedicated to diversity and inclusion and to HR sustainability

Periodic survey on the corporate climate extended to all Group employees

System of services and welfare under constant expansion in order to intercept new requirements and expectations

Italgas Human Rights Policy

Italgas Diversity and Inclusion Policy

Adoption of the Mac ecosystem, capable of ensuring ease of approach to new digital solutions,promoting the sharing and collaboration and improvement of the everyday experience

Smart Rotation system, the internal Italgas job posting, to foster the exchange of skills within the Group, enhancing its people and facilitating upskilling and reskilling

System for the classification and protection of information according to criteria of Confidentiality, Integrity and Secrecy

Risks associated with the quality and level of service



Risk of non-compliance of the commercial levels of service for services to sales companies and/or risk of delayed or partial compliance with the obligations assumed, such as execution of the investments plan related to concessions involving obligations borne by the concession holder


Main methods of management

Continuous monitoring of Key Performance Indicators on commercial processes, alerts and communication to Territorial Hubs for activation/acceleration of territorial interventions

Ad hoc analysis of commercial processes and development of improvement measures

Operating procedures and instructions for Commercial Management of the Service

Acceleration in improvements to the level of service driven by the digitisation of assets and processes

Surveys at sales companies

Italgas digital portal dedicated to Gas2Be sales companies, developed to strengthen the partnership, facilitate the accreditation process of the network and allow the sales companies direct and immediate access to information and news about Italgas such as the most recent
promotions launched in the territory, or about the upcoming webinars designed specifically to increase and improve the exchange of know-how between Italgas and the sales companies

Allocation to a specific business unit of the responsibility for mapping the existing concession obligations, monitoring and activating the network technical units for prompt interventions

Monitoring of the works progress on the basis of the obligations assumed

Constant dialogue with contracting parties, including in order to understand and satisfy update requirements

CRM to support people working at the Italgas Contact Centre in carrying out front-end activities (Customer Service)

Supply chain risks



Risks associated with the availability and cost of materials, services and supplies, the operating capacity and scalability and the reputational and compliance reliability (including respect for human rights) of the suppliers and contractors of the Group


Main methods of management

Planning of procurement, analysis and monitoring of department KPIs

Supplier qualification process which provides for specific reputational checks, including regarding ESG

Anti-mafia audits in tender procedures relating to special sectors pursuant to Article 80 of Legislative Decree 50/2016, to the Reclamation sector and to works under Title IV of Legislative Decree 81/2008 – New digital IT4Buy platform, which improves
i) the speed and simplicity of the supplier registration and qualification process;
ii) the tender process;
iii) contract management

ESG reward criteria during the tender phase on Legality topics, possession of specific ISO certifications, environmental impact (e.g. CO2 emissions)

Verification of sustainability and economic-financial requirements through recognised external providers, as early as during the supplier registration stage

Standardised tender processes and regulations

Weekly tender committee with analysis of the activities performed, vendor list, tender time frames.

Supplier performance evaluation, including in terms of sustainability, integrated into the vendor management module

Management of unforeseeable events: risk assessment to suppliers; procurement diversification; scouting for alternative raw materials

On-site technical and ESG checks for the Qualification purposes of Suppliers deemed Critical/ Strategic

Scouting activities for innovative assets, produced with alternative materials and/or different technologies, functional to asset management/maintenance

Technical specifications being continuously updated including in consideration of the technological changes and contractual clauses that govern cases of goods and services exposed to cyber risk

“Supplier Code of Ethics”, requiring a commitment from suppliers. The code is inspired, among other things, by the information set out internationally in the UN Universal Declaration of Human Rights, the Declaration on Fundamental Principles and Rights at Work and the Conventions issued by the International Labour Organization (ILO) and the Ten Principles of the UN Global Compact, in addition to the contents of the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises

Anti-Bribery Policy Awareness for third parties – request for anti-bribery and/or ISO 37001 declaration from suppliers

“Cybersecurity Awareness for third parties”, with which the Italgas Group’s suppliers must comply

Renewed logistics model with Warehouse Centralisation and management of Withdrawal Points in the territories (UT) and consequent digitisation of monitoring materials in stock/transit

COVID-19, pandemics and new diseases



Risks associated with the health crisis arising from COVID-19 and/or the spread of new pandemics or new diseases that have repercussions on health and safety, on the operating context and on the resulting economic and financial framework of reference of Italgas


Main methods of management

Establishment of a Crisis Committee to monitor and manage the different phases of the pandemic

Continuous monitoring of the changes in the reference regulations and solutions for the management of the COVID-19 emergency both nationally and internationally, maintaining constant connections with the authorities, research organisations and hospitals

Adoption of the Italgas Group Protocol regulating measures to combat and contain the spread of the COVID-19 virus in the workplace

Specific indemnity insurance policy for all employees who test positive for COVID-19 in case of hospitalisation

Flu vaccination campaigns

Specific operating measures to minimise contact (e.g. smart working, starting from home for operating staff) and control (e.g. temperature scanners upon entry, hand sanitiser towers, anti-gathering rules)

Periodic monitoring of positive cases and personnel in quarantine, including through the Appointed Physicians and process for the receipt and management of reports regarding positive COVID-19 cases, which provides for the identification, contact tracing and activation of quarantine in coordination with the Local Appointed Physicians

Periodic distribution of the rules of conduct in relation to changes in the pandemic and the provisions of the Health Authorities

Geopolitical risk


The state of political and military tension generated and the consequent economic sanctions adopted by the international community against Russia have had significant effects and created turbulence on the global markets, on both the financial front and in terms of prices and the export of raw materials, considering the significant role that Russia and Ukraine play in the international economic chessboard.

Italgas confirms that it does not have production activities or personnel deployed in Russia, Ukraine or countries geo-politically aligned with Russia, nor does it have commercial and/or financial relationships with such countries. Italgas has continued to see no materially significant restrictions to the execution of financial transactions through the bank system, even after the exclusion of Russia from the SWIFT international payment system. Nevertheless, in a market already characterised by restrictions and slowdowns in the procurement chain, especially in relation to components, we cannot rule out that the political and economic tension induced by the conflict might exacerbate such difficulties and have implications, in a way that cannot yet be estimated or predicted, on the effectiveness and timeliness of the Group’s procurement capacity.

In particular, following a survey of a significant portion of our suppliers, conducted inthe months following the start of the conflict, it was found that none of the suppliers surveyed reported any impact with the Russian market, while only one supplier reported sub-supplies of Ukrainian origin for which it took steps to seek alternatives.

All the suppliers surveyed confirmed that they have implemented measures to prevent the effects of any cyber attacks. Monitoring in the following months did not show any critical issues arising as a result of the conflict.

It is also noted that most of the processes managed by the suppliers surveyed can be classified as energy-intensive.

The survey confirmed, as previously highlighted, the growing problems in the procurement of electronics and components linked to steel, both in terms of price, delivery time and availability. The subsequent increase in utilities costs is creating tensions on prices. Currently there are no significant critical issues in production on the energy materials/commodities markets. With reference to the tensions on the financial markets, Italgas continues to be only marginally exposed to foreign exchange risk and in any case only against the US dollar.

With regard to the availability of sources of financing and the related costs, it is reported that as at 31 December 2022  i) more than 90% of Italgas’ financial debt is fixed rate, ii) the upcoming repayment of a bond envisaged for 2024 has no refinancing requirements in the short term, iii) the Group in any case holds liquidity at leading credit institutions for an amount, as at 31 December 2022, of € 451.9 million, which, including in light of the existing investment plans and the operations planned in the short term, would make it possible to manage any restrictions on access to credit with no significantly material effects.

With reference to the indirect risks associated with the sales companies that use the Italgas Group’s networks, if they are found to be suffering, in a deteriorated international scenario, from adverse commodity procurement conditions such as, for example, huge increases in the prices of the commodity that cannot be passed on to end customers resulting in a worsening of their financial conditions and related difficulty in regularly complying with their contractual obligations towards the Italgas Group, it is recalled that the rules for user access to the gas distribution service in Italy are established by ARERA and regulated in the Network Code, which also defines the system for existing financial guarantees to protect the distributor.

With reference to the risk of lower volumes of gas injected into the infrastructure, as we know, the current tariff regulation does not lead to exposure of the distributors to changes in volumes of gas distributed. In any case, the risk of a prolonged interruption to injection of natural gas into the distribution infrastructure, which could impact in a significantly negative way upon the Group’s operating continuity, would nevertheless be mitigated by the actions already in place and/or being studied at national and European level, such as the optimisation of storage, the diversification of procurement sources and the increase in domestic output.

Lastly, examining the natural gas distribution service in Greece, and in light of the scenarios illustrated above, the Group has not noted and does not anticipate any significant adverse repercussions on receipts expected from gas sales companies such as to jeopardise the financial balance of the Group, or on the regularity of payments by counterparties.


Legal and non compliance risks

Risk of non-compliance and legislative changes



Risk of non-compliance with legislation at European, national, regional and local level with which Italgas must comply in relation to the activities that it carries out and/or risk of failure to intercept and transpose new regulations falling under the scope of application


Main methods of management

Internal control and risk management system and areas of responsibility defined in terms of compliance

Code of Ethics, Model 231, Policy for the prevention of and fight against corruption, ISO 37001 anti-bribery certification

Monitoring, analysis, distribution and implementation of legislative measures on topics of interest for the Italgas Group and verification of correct implementation

Training for personnel on compliance issues

Analysis and monitoring of the reputational requirements of the Group’s counterparties

“Supplier Code of Ethics”

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