EDF / 2019 Universal registration document

2. Risk factors and control framework Risks to which the Group is exposed

Section 2.2.4 “Operating performance” describes the risks related to the control of the Group’s operating activities across its various industrial activities and projects, including EPR, services and sales. Section 2.2.5 “Risks specific to nuclear activities” supplements section 2.2.4 for the Group’s nuclear-related activities, which entails additional risk factors and special provisions, particularly in view of the primary requirements of nuclear safety and the very long-term capital-intensive nature of nuclear activity. The risks are outlined in detail in each of the relevant sections for their respective category. They are numbered to make it easier to connect the table with the graph and the detailed descriptions that follow. In addition to the risks specific to the EDF group listed below, the impacts of the Coronavirus crisis are described in section 2.2.6. All the risks identified in this document have been selected because they are significant in terms of the materiality of their estimated impact on the Group. In addition, they are prioritised based on a qualitative assessment of their criticality, taking into account simultaneously the significance of the potential impact for the Group, the probability of their occurrence and the level of control, in light of the

actions undertaken. This prioritisation produces a three-level scale for all risks: the criticality can be considered strong, intermediate or moderate. The categories are not ranked among themselves. As a general rule, the scope of exposure is France, Belgium, Italy, the United Kingdom and all countries in which the Group is present. Where the scope of exposure is more restrictive, it is specified in the table and in the risk description. Exposure to risk may vary according to duration. The potential impact of these risks may produce effects at very different time horizons, ranging from very short term (less than a year), to medium term (up to a few years) to very long term (up to several decades or more, given the nature of the relevant industrial activities which may span centuries). In order to control risks, measures have been put in place. Some measures apply to all risks: internal control, commitment approval process (see section 2.1); others are specific to each risk. Additional provisions for taking into account certain risks related to Corporate Social Responsibility are set out in chapter 3. Cross-references shall, where appropriate, be specified in the risk description.

EDF GROUP’S SPECIFIC RISKS

Market regulation, political and legal risks

1.

2.

4.

Financial and market risks

Operational performance

• 1A – Public policy developments in France and Europe • 1B – Evolution of the regulatory framework (ARENH, TRV, environmental regulations and SNBC) • 1C – Evolution of the regulatory framework for hydraulic concessions ***

• 2A – Interest rate risk

• 4A – Management of large and complex industrial projects (including EPR projects)

• 2B – Financial markets risk • 2C – Energy market risk

• 4B – Hydraulic safety risks • 4C – Occupational health or safety violations (employees and service providers) • 4D – Attacks against assets, including cyberattacks • 4E – Operational continuity of supply chains and contractual relationships

• 2D – Exchange rate risk • 2E – Counterparty risk • 2F – Access to liquidity risk

• 1D – Evolution of the regulatory framework for electricity distribution concessions ***

• 4F – Blackout risk • 4G – Industrial safety and impact on environmental assets, including biodiversity

• 1E – Ethics or Compliance Violations • 1F – Legal Litigation Risk • 1G – Increased cost caused by energy savings certificates * • 1H – Insufficient compensation for missions of general interest *

Group transformation and strategic risks

3.

• 3A – Transformation capacity in the face of disruptions • 3B – Adaptation to climate change: physical and transition risks • 3C – Adaptation of employees' skills • 3D – Ability to ensure long-term social commitments

Specific risks related to nuclear activities

5.

Criticity

• 5A – Failure to comply with the operating objectives and/or in terms of extending the operating life of nuclear power plants (France and United Kingdom) ** • 5B – Control of radioactive waste treatment and decommissioning of nuclear facilities, and ability to meet related commitments **

• Strong

• Intermediary

• Moderate

• 5C – Nuclear safety risks during operation resulting from nuclear civil liability ** • 5D – Control of the fuel cycle **

Main exhibition perimeter, France, Europe and International, with specific mentions. * France ** France and United Kingdom *** France and Italy

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EDF | Universal registration document 2019