LensCrafters 2015 Annual Report Download - page 64

Report on corporate governance and ownership structure as of December 31, 2015 Page 24 of 45
based on the following features and in line with the models and best practices recognized internationally:
i. the definition of a Risk Model for the Group, which classifies in 5 risk factors, those that may compromise the
attainment of corporate objectives (strategic, contextual, operative, financial and compliance);
ii. the development of a risk assessment and risk analysis methodology to measure exposures in terms of impact
and probability of occurrence; and
iii. the collection, analysis and aggregation of data and information necessary for processing a Risk Report for the
Group directed to the top management of the company.
The process described above, which was devised to be implemented in cycles, involved a wide range of managers (77 in
2015), meaning that the most significant risk exposure for the Group was identified. In parallel to this activity, specific
activities aimed at mitigating the risks identified previously were carried out directly by the Risk Management
department and/or the Managers of the various businesses. The Control and Risk Committee is regularly updated on
developments in the Group Enterprise Risk Management program as well as on the results of analysis and actions taken.
Compliance
With reference to compliance, in 2011 a specific program aimed at the mapping of all of the most relevant areas for the
Group and gaining an understanding of the level of maturity and protection of processes was set up. On the basis of this
program, specific compliance initiatives focused on Corporate Criminal Liability/Anti-Corruption, Privacy Data
Management, Responsible Sourcing/Supply Chain Compliance and Antitrust & Competition Compliance were scoped,
defined and developed over the two subsequent years.
In 2013 work has continued on the definition of a comprehensive governance model for the Group’s Compliance
function, aimed at achieving a more efficient, rational and pervasive monitoring of the processes and through
subsequently reorganization of this function.
(II) Control, management and analysis of financial risk
Within the context of the risk factors mentioned in the previous paragraph, the Enterprise Risk Management process
paid particular attention to financial risk.
In order to deal with the developments in operating conditions and the legal framework, the Company implemented two
policies that define the rules and principles to (i) identify; (ii) monitor; and (iii) analyze financial risk.
Financial Risk Management Policy:
The Financial Risk Management Policy was introduced in 2006, but was most recently updated by the Board of
Directors in January 2016, given the new structure of the ICFR System.
The policy sets forth the principles and rules for the management and monitoring of financial risk and pays particular
attention to the activities carried out by the Luxottica Group to minimize the risks deriving from the fluctuations of
interest rates, exchange rates and the solvency of financial counterparties.
The policy clarifies that the instrument used for “interest rate risk” hedging is the plain vanilla “interest rate swaps”,
whereas for “exchange risk” “non-speculative” derivative instruments, such as “spot and forward exchange contracts”
are used. In certain circumstances and subject to the specific authorization of the CFO, more flexible instruments that
replicate the effect of the forward exchange contract or “zero cost collar”, “accumulator forward” and “average strike
forward” can be used.