EDF / 2018 Reference document

2.

RISK FACTORS AND CONTROL FRAMEWORK Risks to which the Group is exposed

The main risks to which the Group considers itself exposed, and taking into account its specific nature, are described in section 2.1 "Specific risks to which the Group is exposed". The measures taken by the Group to control activities and the risks to which it is exposed are described in section 2.2 “Control of Group risks and activities”.

The dependency factors on its customers and suppliers are specified in section 2.3 "Dependency factors". In general, the Group faces legal risks in all of its activities and in its various markets. The main legal, administrative and arbitration proceedings in which the Group is involved are described in Section 2.4 "Legal proceedings and arbitration". Chapter 2.5 "Insurance" describes the EDF group’s insurance programme.

2.1

RISKS TO WHICH THE GROUP IS EXPOSED

public policies in the field of energy. ■ Section 2.1.2 "Risks related to the competitive and general context" describes the risks caused by exposure to the energy markets in which the Group operates, as well as the risks caused by changes to competition and new societal expectations, economic or general circumstances, and elements of public policy or general regulation in the various countries and territories where the Group exercises its activities. The following three categories cover factors that are internal to the Group (in orange in the graph below). Section 2.1.3 "Risks related to the transformation of the Group" describes the risks associated with the implementation of its strategy, the evolution of the EDF group's portfolio and business model, and its transformation in its industrial, service and sales activities with the associated change management. Section 2.1.4 "Risks related to the Groups' operationnal performance" describes the risks associated with the control of its operational activities in its various industrial, services and sales activities. Section 2.1.5 "Specific risks related to the Group's nuclear activities" describes the specific risks related to the Group's nuclear activities, which involves additional risk factors and specific measures, notably with regard to the overriding requirements of nuclear safety and the long-term capital-intensive nature of the nuclear activities.

The Group operates in an environment that is experiencing profound change, generating numerous risks, some of which are external and may depend on regulations as well as on the economic or general environment. These risks are in addition to the internal risks inherent in the activities of the Group's divisions. The issues associated with the risks to which the Group is exposed are multi-criteria. They may be strategic or operational and may have financial consequences, in particular on its financial position or real estate property value. The Group describes hereinafter the specific risks to which it considers itself exposed. The principle of specificity leads us to describe in this section only those risks for which the specificity of the EDF group is a key factor. For risks that are not specific to the Group, the absence of a risk description in this section does not exclude the Group from taking the risk into account. The risks related to ongoing legal proceedings and arbitration are described in Section 2.4 "Legal proceedings and arbitration". Specific risks are divided into five categories, described in sections 2.1.1 to 2.1.5 respectively. The first two categories concern factors outside the Group (in blue in the graph below). Section 2.1.1 "Risks associated with the regulation of energy markets" describes the risks associated with the regulation of energy markets, in particular those for electricity, with consideration of: competition rules, especially in Europe and France, where most of the Group’s ■ activities are conducted;

112

EDF I Reference Document 2018