2 _61 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 2 RISK MANAGEMENT Risk factors specific to Michelin, description and related management systems Risk 10 – Lack of employer attractiveness/employee retention Risk factors Employees are the primary driver of our success and play a critical role in fulfilling our ambitions. At a time of shifting attitudes to work, particularly in the manufacturing industry, this risk could be manifested in hiring difficulties, high employee turnover, a lack of experience in certain key positions, and the possible loss of knowledge or skills over the longer term. Specific nature of the risk The Group's tire manufacturing business is highly capitalintensive. As a result, the production plants are often in operation 24/7, giving rise to workplace constraints that may reduce both the appeal of these jobs and the retention of employees trained in them in certain mature regions where the Group has sited its production operations, and in certain local labor markets. In addition, the creation of shared services centers, particularly for administrative and digital technology processes, may expose the Group to a competitive talent war. Governance and risk management response Managing attractiveness and retention risk is the responsibility of the Corporate Personnel Department’s management team, which is led by the Executive Vice President, Personnel, who is a member of the Group Executive Committee. The team also oversees the “Managing social cohesion and people” risk family. These risks are audited internally on a regular basis, with the attractiveness and retention risk last audited in 2023. All seven personnel management policies are helping to improve the Group’s employer appeal and employee retention (see Chapter 4, section 4.1.2.4 Supporting employee growth and development, below). More specifically, a number of levers have been or are being deployed to reduce the Group's exposure to this risk: ● highly agile compensation policies aligned with local conditions. At the same time, Michelin pays close attention to ensuring fairness among its country organizations by offering every employee profit-sharing initiatives and compensation components linked to its worldwide performance (Group bonus, employee share ownership plan); ● a best practices sharing network, covering, for example, initiatives in certain plants to improve the onboarding and training process during an employee’s first year on the job; ● a proactive approach to decent wages and a universal social protection floor, which is also helping to strengthen the employer brand and employee pride in working for the Group; ● in addition, in the Manufacturing Department, a study conducted in 2022 led to the creation in 2023 of a dedicated team tasked with defining and rolling out the vision and strategy for the People component (talent development, expertise and skills, diversity and inclusion, team engagement, improving the employee experience). The team is appointing relay officers in the operating regions, close to the ground, to gain greater understanding of local conditions and listen more attentively to employee needs. This issue is one of the Manufacturing Department’s six priorities. Risk 11 – Knowledge retention Risk factors One of Michelin's competitive advantages stems from the ability to sharply differentiate its products and services thanks to continuous, sustained innovation. Consequently, protecting its knowledge and expertise is a key factor in maintaining its leadership and driving its future growth. This culture of protecting knowledge and know-how is part of the Group's DNA. Specific nature of the risk Because Michelin invests heavily in innovation and the development of new growth businesses, protecting knowledge and expertise is essential to maintaining its technological leadership. Sensitive information largely concerns products, services, materials, procedures and equipment, as well as techniques, methods, design, testing and manufacturing data alongside the related data bases. However, information about production, research, marketing and other business strategies, as well as consumer and supplier databases, also risk being lost or stolen. The Group is exposed to risks in its cooperation with external stakeholders, including consumers, suppliers, partners, subcontractors and academic institutions. Likewise, it is dependent on the information systems used to store and share sensitive information. In addition, Michelin must also address the growing use of social media, the development of artificial intelligence solutions and the resulting risk of information leakage. Governance and risk management response A governance body is in place for this risk factor, chaired by the Executive Vice President, Group Research and Development, and co‑chaired by the Executive Vice President, Manufacturing. To prevent the risk of Michelin know-how and/or expertise being disclosed or lost: ● projects, processes and data are classified according to their sensitivity, with each classification protected by appropriate safeguards and practices. For example, cloud computing solutions are no longer used for certain categories of data and encryption levels have been raised for certain other categories;
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