The main risk factors to which the Group is exposed within its sector are as follows:
- risks linked to the general state of the economy
- operating risks
- financial risks

Risks linked to the general state of the economy
The economic recovery is still unsure and unstable, with a high degree of uncertainty and with short- and medium-term macroeconomic prospects that are still hard to discern. This has led to stagnation in consumers’ willingness and ability to spend, and it has prevented any clear global recovery of advertising investments after the drastic contraction in 2008 and 2009.
In order to cope with this market scenario, the Group drew up – and mostly achieved already by the end of 2010 – a plan to reduce costs (€140 million in savings) and to rationalise its organisation and production system.
The persistence of critical aspects in the macro-economic context and, in particular, in the advertising market, especially in the press sector, made it necessary for the Group to make a further commitment to reducing costs in all its business areas. The aim is also to ensure  the continuity and development of its own assets.

Operating risks

Risks linked to fluctuations in paper prices
Since it works to a great degree in the publishing sector, the Group is a major purchaser of paper and is thus exposed to the risk of price fluctuations. In order to achieve more efficient management of paper supply and, especially, to strengthen its bargaining position with its counterparts, which also promotes competition between them, the management of paper purchases for the various companies in the Group is centralised.
In the past, the Group used to draw up paper-swap contracts for a percentage of its annual needs but now, having assessed their ineffectiveness in the medium term, it has decided to stop using this system.

Credit risk
The Group’s exposure to credit risk concerns trade and financial receivables. Due to the sectors it operates in, the Group has no particularly significant credit risk on trade receivables. Even so, though there are no significant concentrations of exposure, the Group adopts operating procedures that ban the sale of publications, advertising spaces, and other services to clients who do not have a suitable credit profile or who do not provide collateral guarantees. Despite these procedures, it is not possible to rule out the risk that, in the current state of the market, a certain number of clients may fall behind with payments or fail to honour them, so the Group has included in the budget a congruous provision for bad debts.
As regards financial receivables, investments of liquid assets and any trading in derivatives are carried out solely with banks that have a high credit rating.

Legal risks, sector regulations and compliance
It cannot be ruled out that the Group may be required to face liabilities as a result of legal and tax controversies of various natures. To face such risks, the Group has always accrued adequate amounts in special reserve accounts for liabilities and charges recorded in the financial statement (see the explanatory notes to the statement).
The Group has adopted a code of conduct which is always submitted to all company employees, subject to constant monitoring to ensure its correct application. With reference to Italian Legislative Decree 231/2001 on the administrative responsibilities of institutions, it should be pointed out that every company in the Group has its Organisational, Management and Control Model which is constantly updated to comply with the latest applicable regulations.
Lastly, the Group is subject to potential risks deriving from changes to the applicable rules and regulations, especially as concerns the radio and television sector, which might influence compliance with technical and operational requirements. With this in mind, the Group constantly monitors these changes and maintains constructive dialogue with the institutions in order to ensure prompt application of all new regulations.

Financial risks
The management of financial risks is regulated by Group policy, which sets out the objectives, strategies, guidelines, and operating procedures.
In the case of finance and cash management, the Group adopts a procedure based on prudence and limited risk in its choice of funding and investment operations. Amongst other things, this includes an absolute ban on all speculative operations other than those that are adequately motivated and approved by the Board of Directors.
The Holding company manages and coordinates a centralised intra-group current account in which all the subsidiaries take part, in order to obtain economic advantages in relationships with the counterparts and to achieve greater operating efficiency. This centralisation does in fact enable more effective planning and control of the flow of funds and ensures greater consistency in financing and investment decisions, optimising the overall risk profile of the Group and, especially, strengthening its bargaining power with the banking system.
As required under IFRS, further information about risks deriving from financial instruments is provided in the special section of explanatory notes to the statement.