2 _63 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 2 RISK MANAGEMENT Cross-functional risk management procedures 2.2 CROSS-FUNCTIONAL RISK MANAGEMENT PROCEDURES Procedures are in place to manage cross-functional risks. 2.2.1 Synchronization between Internal Audit, Risk Management and Internal Control Internal Audit, Risk Management, Internal Control and Quality activities have been brought together within a single Corporate Department, which provides a shared vision of the priority risks and challenges for the Group. It also supports efficient coordination and follow-up between the second (Internal Control and Risk Management) and third (Internal Audit) lines of defense across every timeframe and every Group unit. 2.2.2 Internal control process Objectives of the internal control process The Group's internal control process has the following core objectives: ● application of the instructions and guidelines issued by the Managers and the Group Executive Committee; ● compliance with laws and regulations; ● the proper functioning of internal processes, particularly those relating to the protection of corporate assets; ● ensuring the reliability of financial and non-financial information. It comprises a set of resources, procedures, practices and actions aligned with the characteristics of the Group’s businesses, which: ● contribute to the control over its activities, the efficiency of its operations and the efficient utilization of its resources; ● enable the Group to assess all of its material operational, financial and legal risks appropriately. In general, the risk management process has been designed to encourage informed, shared risk-taking in accordance with the Group's values of responsibility, integrity and ethical behavior. Michelin intends for Internal Control to become a tool for managing both its operations and the performance of line personnel, so that it can enjoy the benefits of efficient governance and the reasonable assurance that its risks are under control. Scope of the internal control process The Group ensures that the internal control process is implemented in every unit: ● The system covers substantially all the Group’s operations, including every operating region and every business unit (manufacturing, sales and dealership networks). In the event of an acquisition, a dedicated internal control system is deployed in the new unit, in alignment with its business and risks. The scope of internal control is broad and extensive, covering every potential area of major risk. ● In extending the internal control process, the Group has updated and broadened it to address risks relating to the reporting of non-financial information. It will cover all the activities involved in collecting data and metrics, and in consolidating and publishing information as part of the non‑financial reporting process. ● To manage this system in a cross-functional and consistent manner across all Group activities, the Internal Control Department has been integrated into the Corporate Internal Audit, Risk Management, Internal Control and Quality Department. An Internal Control network is organized and led through the Quality Network, with training and collaborative spaces made available to all the employees who participate in the network. A detailed description of the internal control process covering the preparation of accounting and financial information is provided in section 2.3.
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