EDF / 2018 Reference document

RISK FACTORS AND CONTROL FRAMEWORK Control of Group risks and activities

developing and disseminating financial management methods and ■ processes, contributing to the dissemination of the financial management culture within the Group; Reporting: ■ overseeing the processes of the Group’s management cycle (budgets, ■ revisions of forecasts and medium-term plans), summarising them and proposing choices at the level of the departments and subsidiaries, within the framework of the Accounting and Financial Reporting policy. The Financial Department’s role is to alert and make proposals in the pre-decision-making analysis on the financial consequences of the operations envisaged, or the performance levels proposed, developing medium- and long-term financial trajectories; ■ Accountancy: ■ preparing EDF's financial statements and the Group's consolidated ■ financial statements, ensuring accounting compliance using the Group's Reporting Guidelines ■ setting out the accounting standards and chart of accounts to be applied, organising the Group’s accounting and financial internal control system as ■ defined in the Group “accounting and financial internal control” instruction, according to a system detailed in section 2.2.2.3 "The internal control procedures relating to reliability of financial and accounting information"; Taxation: ■ ensuring the consistency of tax practices, the requirements of which are ■ listed in the Group's Tax policy. The precise provisions in this area are discussed in section 3.5.2 "Tax transparency" of this document, ensuring the proper implementation of legal and declarative obligations, ■ notably by monitoring the subject, ensuring the accounting follow-up of the deferred tax position and the ■ periodic justification of the accounts, identifying and controlling the Group’s tax risks; ■ Finance and Investments, Insurance: ■ ensuring that the Group is financed within the context of the policy on ■ Financing, Cash and Financial Risk Control, coordinating all the actions inherent in the Group’s balance sheet and ■ financial result, with the aim in particular of controlling the exposure of the Group’s hedging assets, debt and the Group’s overall balance sheet to financial risks, managing the investments and acquisitions and disposals as well as the ■ listed or unlisted dedicated assets, appraising the investment projects presented to the Executive Committee ■ Commitment Committee meetings to anticipate impacts and improve the reliability of the financial trajectories on the Group’s balance sheet and profit and loss accounts, as defined by the Commitments policy, developing and implementing innovative insurance coverages at the best ■ market standards designed to support the development of the Group in all its dimensions, as defined by the insurance policy (see section 2.5 "Insurance"); Financial communication of the Group according to the requirements of the ■ Financial Communication policy (see section 2.2.2.3.4 "Financial communication"); Finance Information System (IS): the Finance IS comprises a common basis for all ■ the Group’s departments, as well as tools specific to each of the entities or subsidiaries according to the specificities of the country or activity and raises several important issues in terms of data integrity and application availability. The Financial Department acts as the project owner.

The Group Executive Committee Commitments Committee To strengthen the appraisal and monitoring of projects, the Corporate Investment Committee of the Group Executive (1) (CECEG) thoroughly examines the most significant projects in terms of the extent of the commitments and/or the risks incurred before decisions are made by the Executive Committee (see section 2.2.2.2.3 “Approval of commitments”). The 2 nd line of control of risks and 2.2.1.4 activities: players and missions The second line comprises all the Group's support functions (Procurement, Communication, Sustainable Development, Ethics and Compliance, Finance, Real Estate, Legal, Human Resources, Risks, Asset Security, General Services and Information Systems). These Departments implement, in conjunction with the Operational Directors, a global management and steering system for their business line within the Group. In particular, these support functions are responsible for organising and coordinating the implementation of Group policies. Note: the Group's human resources aspects, including in particular the control of risks relating to the health and safety of employees and service providers, are detailed in Section 3.2.2.1 ("A standard-setter in Health & Safety: the well-being of the women and men in our company, and that of our contractors, is an absolute priority") of the Reference Document. Group Risk Department 2.2.1.4.1 The Group Risk Department (reporting to the General Secretary) has the following tasks: deploy the risk and internal control policy, organise the internal control function ■ and, in particular, prepare and update the consolidated map of major risks and the assessment of the Group’s internal control (see the detailed system in section 2.2.2.1.1"Map of major risks and the activity and risk management report"); alert the Chairman and CEO and the Executive Committee on emerging risks and ■ risks that have not been sufficiently observed; ensure the control of energy markets risks by deploying the energy markets risk ■ policy (see section 2.2.2.2.1 " Control of energy market risks); define and deploy the control of financial risks (interest rates, foreign exchange, ■ liquidity and credit) and the risk of counterparty default (see section 2.2.2.2.2 "Control of financial risks"); control the comprehensiveness and relevance of risk analyses for investment and ■ long-term commitment projects submitted to the CECEG for decision (see section 2.2.2.2.3 " Approval of commitments"); deploy the crisis management and business continuity policy and ensure that the ■ crisis management organisation is maintained in an operational condition for the Group level (see section 2.2.2.1.2 " Crisis management and business continuity). The Financial Department 2.2.1.4.2 The Financial Department contributes to controlling the activities of the Group, notably through the following missions: Performance Management: ■ contributing to the management of the performance of the Group’s entities ■ by helping define the Group’s performance plans and by challenging the measures implemented by the entities and business lines. To this end, the Financial Department implements a set of management indicators appropriate to the economic model of each activity of the Group, within the framework of the policy on the Management of Economic and Financial Performance (2) , contributing to monitoring the implementation of the budget through ■ performance reviews generalised within the Departments and the subsidiaries that are controlled, conducting portfolio reviews and economic and financial optimisation ■ analyses,

2.

The composition of the Executive Committee’s Commitments Committee is the same as that of the Executive Committee. (1) This policy applies to all entities of EDF SA and subsidiaries, with the exception of regulated infrastructure operators, for whom shareholders’ rights are exercised in the economic (2) supervision framework specified by Directives 2009/72/CE and 2009/73/CE.

129

EDF I Reference Document 2018