_54 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 2 RISK MANAGEMENT Risk factors specific to Michelin, description and related management systems 2.1 RISK FACTORS SPECIFIC TO MICHELIN, DESCRIPTION AND RELATED MANAGEMENT SYSTEMS In today’s constantly evolving environment, the ability to foresee, manage and track risks is a core component in Michelin’s corporate strategy. The Group's geographic reach and leadership position in the global tire market, as well as the diversity of its business activities, mean that it is exposed to a variety of risks, both endogenous and exogenous. Strategic, financial, industrial, commercial, environmental and people-related risks have been clearly identified and are being managed in ways that minimize their occurrence and impact. The crisis management system and the full range of prevention and protection measures have been put to the test in recent years, confirming the Group’s confidence in its ability to deal with multiple crises on an ongoing basis. For Michelin, a risk corresponds to the possible occurrence of an event whose consequences could affect its objectives, financial position or reputation, or affect its stakeholders, i.e., events or practices that could have an impact on people, the planet and society. All these risks are reviewed on an ongoing basis by the Michelin Group as part of its risk mapping process. To support disciplined risk management, the Group has deployed a holistic risk management process that complies with the most exacting international professional standards, such as COSO or the reference framework of the European Securities Market Regulator (ESMA) and the French securities regulator (AMF). The process is being constantly upgraded to reflect the latest legislation and risk management best practices, thanks in particular to the continuous tracking of recurring risk management publications (World Economic Forum, AXA Future Risks Reports, Risk In Focus, etc.), and the Group’s active participation in such outside organizations as the Association pour le Management des Risques et Assurance de l'Entreprise (AMRAE) and the Institut Français de l'Audit et du Contrôle Interne (IFACI). In a commitment to ensuring that risks identified internally are aligned with stakeholder expectations, the risk management process is underpinned, in particular, by a materiality matrix specifically designed to address Group issues (see below). The Group manages and assesses 250 risks (with both gross and net/ residual approaches), organized into 14 families. These 250 risks include both stakeholder expectations (as presented and prioritized in the materiality matrix above) and risks that are deemed critical to the Group and its sustainability. Strong Very strong Critical Very strong Critical Strong STAKEHOLDER EXPECTATIONS 27 - Responsible water management IMPORTANCE FOR MICHELIN 2.5 3.0 3.5 4.0 3.0 3.5 4.0 26 - Waste management 25 - Protecting soil quality and biodiversity 24 - Responding to environmental damage 23 - Management of employee relations 22 - Employee volunteer service 18 - Transparency and access to information 17 - Local community development 21 - Fostering workplace well-being 20 - Developing employee skills 8 - Development of new services and solutions in our new non-tire businesses 1 - Employee health and safety 2 - Quality and safety of products and services 3 - Direct contribution to climate change (Scopes 1 and 2) 4 - Environmental impact of raw materials 5 - Indirect contribution to climate change (Scope 3) 6 - Respect for human rights in the supply chain 7 - Sustainable procurement and responsible supplier relationships 9 - Diversity and equal opportunity 10 - Business ethics 11 - Collaboration with our ecosystem 12 - Data protection 13 - Responsible governance 14 - Air quality Social Business and governance Environment 15 - Eco-design of our products and services 16 - End-of-life products 19 - Attracting and retaining talent
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