Carrefour - 2017 Registration Document

4 MANAGEMENT’S DISCUSSION AND ANALYSIS AS OF DECEMBER 31, 2017 Risk management CARREFOUR | 2017 REGISTRATION DOCUMENT 193 Principal risk factors 4.7.1 The principal risk factors identified by the Group are presented below, grouped into four categories: business environment; ● strategy and governance; ● operations; ● and financial. ● In 2017, the Group focused on: regulatory changes, particularly regarding personal data with the ● new General Data Protection Regulation (GDPR), prevention of market abuse, and implementation of the requirements set out in France’s Sapin II law (transparency, anti-corruption and economic reform) and the new duty of care law; information system security in view of the growing threats ● related to cybercrime and the online sales development strategy; and product quality and safety. ● On January 23, 2018, the Group presented its “Carrefour 2022” transformation plan designed to adapt its business model and organisation to become the world leader in the food transition for everyone. The plan is structured around four pillars: deploy a simple and open organisation, achieve productivity and competitiveness gains, create a leading omni-channel universe and overhaul the product offering to promote food quality. The Group risk map includes plans to prevent and manage the operational and strategic risks related to this transformation plan. Business environment 4.7.1.1 Political and social environment Some of the Group’s activities are exposed to risk and uncertainty in countries which have experienced or may experience a period of political or social instability or weak governance. During the past several years, the Group has developed a global monitoring system and countryspecific risk maps which take into account a number of indicators. These tools are updated annually and provide forward-looking monthly tracking, in order to support decision making in the context of the Group’s international growth. For example, some countries where the Group operates through franchise partners are experiencing social tensions or political instability, leading the Group to carefully monitor these developing situations over the long term. All proposals or plans to operate in a new country and all security risks related to stores in a particular geographic area are carefully reviewed and assessed to ensure an insightful decision-making process. Economic environment and market volatility unpredictability of the global, national or regional economic climate. Volatility in asset prices and the cost of raw materials and commodity-related products (agriculture, metals, fuel, energy costs, etc.) may also impact sales, costs and results. The economic situation in countries where the Group operates may affect demand, spending levels and our customers’ consumer habits. Such impacts may be intensified by the instability and Due to the nature of its activities, the Group pays particular attention to monitoring and taking into account the changing economic climate and future outlooks in the countries where it operates, specifically through a number of studies and exchanges. Given the interdependence of activities and the price sensitivity for Group customers, changes in market prices are also taken into consideration at various levels, especially purchases of goods and general and administrative expenses. The Group pays close attention to the economic climate in its countries of operation and more particularly in certain emerging countries. Key economic indicators in countries where the Group operates are tracked monthly and taken into account in both strategic planning and project assessments. The Group may call upon a panel of experts as part of this oversight. During the year, the Group carried out a review of the issues arising from the availability and volatility of commodities. It has effective tools that provide a forward-looking view of food and non-food commodity prices. Environment, regulatory pressure and developments Regulations applicable to the Group in countries where it operates, along with regulatory changes and actions taken by local, national and international regulators, are likely to impact our activities and the Group’s financial performance. The Group is subject to a wide range of laws and regulations in France and abroad governing the operation of establishments open to the public, consumer protection, relationships between industry and retail, and regulations specific to certain activities (such as banking, insurance, payment, supply chain, e-commerce, real estate and service stations). The local Legal Department in each country is responsible for monitoring regulations and taking them into consideration, under the coordination and supervision of the Group Legal Department. Focused on forward-planning and optimal allocation of resources, the Group Legal Department has also developed and implemented a legal risk mapping process, specifically taking into account the environment and regulatory changes. For example, the Group has taken note of the new European Union data protection regulation, which comes into effect as of May 2018 in all 28 EU member states. The Group has implemented a panEuropean programme to govern and coordinate the compliance work required by the General Data Protection Regulation (GDPR) at Group level. The programme is based on action plans for each country and on key roles in each entity (data protection officer, employee business line officer, customer business line officer, IT officer).