Risk management Risk factors specific to Michelin, description and related management systems 03 Risk 10 – MICHELIN brands and reputation Risk factors Michelin has an excellent reputation, both in terms of its products and services and as a company. However, like any other wellknown multinational corporation, it is exposed to potential damage to its reputation and brands. In addition, the constantly growing influence of social media means that the Group is exposed to online reputational risk, at a time when information is openly and rapidly circulated. Specific nature of the risk In light of the Michelin brand's image and reputation (the Michelin brand power score is nearly two times higher than that of its nearest competitor), an attack on the Michelin brand and reputation would have a serious adverse effect on the Group. It is vital to safeguard the Group’s brand and reputational equity, which is one of its major assets. Governance and risk management response Michelin Brands and Reputation Risk Governance is the responsibility of the Corporate Engagement and Brands Department and the Lifestyle Business Line. With the support of the Corporate Internal Audit, Risk Management, Internal Control and Quality Department, and the Group's Legal Department together with its Intellectual Property Office, the above Governance body manages a full array of initiatives to safeguard the Group’s reputation and brands. Among these efficient measures is a systematic, ongoing intelligence process that analyzes online, social and other media to identify any initiatives or comments that could spiral out of control and cause long-term damage to the Group’s reputation. In addition, guidelines for the proper use of social media have been issued for all Group employees, with an update in 2022. They describe the simple rules and best practices to follow to attenuate the risks involved in using social media. The crisis management process also helps control reputational risk. Risk 11 – Pension and other defined benefit plans Risk factors In certain countries, employee benefit obligations include unfunded, partially funded or fully funded pension and other defined benefit plans that represent a long-term benefit payment obligation for the Group. The main factors impacting the amount of the obligation are returns on plan assets for the funded plans, actuarial assumptions (including the discount rate), experience adjustments, changes in legislation and plan amendments. An adverse change in one or more of these factors could increase the amount of the net obligation and consequently could require the Group to make additional contributions to make up for the funding shortfall or increase future benefit payments. The Group's main pension plans in English-speaking countries are funded and have policies in place to hedge any discount rate risk. Specific nature of the risk The Group's pension and other defined benefit plans mainly concern North America and Europe. The total obligation for pensions and other employee benefits amounted to €7.3 billion at December 31, 2024. At the same date, the related plan assets totaled €4.8 billion. Governance and risk management response Governance for this risk factor is provided by the Global Employee Benefit Board (GEBB), which is co-chaired by the Deputy Chief Financial Officer and the Executive Vice President, Personnel. For details on provisions for employee benefit obligations and the measurement and treatment of defined benefit plan risks, see note 8 to the consolidated financial statements. Note that in September 2024, the UK pension plan completed a buy-in transaction (including an insurance policy covering a range of longevity, inflation and investment risks), thereby significantly reducing the net obligation risk (see note 8, section 5.2). Impact 12 – Product safety Impact factors Most of the gross safety risk in the product portfolio stems from tires, which remain Michelin’s traditional core business. It holds robust leadership positions around the world and across all three operating segments: automotive, road transportation and specialty markets. Like all tiremakers, if defects appear in its products during their use or if they fail to comply with the applicable regulations, the Group could be faced with liability claims or be required to recall the products. This impact therefore entails material reputational and financial risks for the Group. Specific nature of the impact Michelin’s focus on customer needs and the quality of its products and services has built confidence in the Michelin brand and contributed to the Group’s performance. Updated in 2021, the Quality Statement emphasizes that “Quality remains critical to the safety of our products and services and to their compliance with applicable requirements.” 166 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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