Exclusive Networks // Sustainability Report 2022

Risks and opportunities Risk factors

2.1.3

Legal and regulatory risks

Risk related to export control regulations and sanctions regimes and embargoes relating to economic sanctions on Dual-use products ESG

Criticality level: ■ ■ ■

Risk description

Risk management

The Group directly or indirectly purchases and distributes products and solutions considered Dual-use, i.e. classified as Dual-use items (likely to have both civilian and military use) where they incorporate encryption technology. Their export or re-export may thus be subject to the obtaining of an export licence granted by the authorities of the exporting countries or an exemption. The development of the Group’s activities and locations thus increases its exposure to political and economic risks specific to certain countries that could affect its activities and results. The Group’s ability to market new products and enter new markets may depend on obtaining government certifications and approvals. Despite the Group’s efforts to comply with all such laws and regulations, unintended violations or failure to comply could result in the suspension of export privileges. This is because these rules are based on international, national and regional security strategies, national independence and global geopolitical developments. In the event of non-compliance with applicable laws and regulations, the Group could be exposed to significant fines and other administrative and criminal sanctions that could have a material adverse effect on its financial condition, business and reputation.

The Group has taken all appropriate and necessary measures to comply with all international and national trade regulations applicable to its activities. It has set up a specific internal plan dedicated to these export control and embargo compliance regulations. This plan includes:  adapted procedures and IT tools, such as the one used to ensure the final destination of products;  employee awareness programmes;  a regular internal audit plan;  a system for monitoring legislative and regulatory developments and restrictions applicable to the Group’s activities;  a system for screening vendors, resellers, end customers and other partners;  Group businesses and entities are provided with specific assistance and advice by the community of export control experts, country and Group champions. In 2022, the Group strengthened its organisation by creating the position of Group Export Control Manager, whose main missions are to update procedures to supervise the community of country Export Control Managers appointed in each Group company. Group companies report to the Group Export Control Manager any disputes or potential non-compliance with regulations, inform the relevant authorities of any non-compliance found and take all necessary steps to prevent any problems that may arise. (See Chapter 6, section 6.7 “Export control”).

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Exclusive Networks

Sustainability Report 2022

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