Groupe Renault - 2020 Universal Registration Document

01

INTERNAL CONTROL AND RISK MANAGEMENT GROUPE RENAULT

Risk management Against a backdrop of highly volatile raw material prices and changes in energy mixes (gasoline, diesel, electrified vehicles), Groupe Renault is supplementing its purchasing, technical, monitoring and hedging policies in order to identify and limit supply and cost overrun risks. For purchasing policies, Groupe Renault continues to develop multi-sourcing for materials such as steel or cast aluminum so as to optimize costs while securing supplies. The Group is also reinforcing the control of materials contained in parts and components through a panel of approved materials and the performance of detailed analysis of material prices in the costing of parts. In terms of technical policies, the Group is actively working to reduce the use of or to substitute sensitive materials such as cobalt, palladium and rhodium. It continues to also develop the use of recycled materials (precious metals in particular) and the recycling of end-of-life vehicles. The new Re-Factory project in Flins announced on November 25, 2020 is a further step in this direction. In a forward-looking approach, the Group reassesses its forecasts on a bi-monthly basis for the main indexed and non-indexed items. At the same time, it ensures permanent monitoring of critical materials markets and suppliers. Finally, to reduce risks and limit exposure to market fluctuations, Groupe Renault negotiates annual raw materials supply contracts whenever possible and appropriate. Furthermore, a systematic hedging policy has been put in place for the main indexed commodities. The Group’s operating sites, whether manufacturing sites, engineering and testing centers, logistics platforms or even commercial sites are exposed to the risk of industrial accidents, fires, explosions and machine breakdowns. In addition, some facilities (see in particular section 1.1.3.4 of this Document presenting the main industrial sites) are subject to the risk of natural disasters: earthquakes (particularly in Chile, Turkey, Romania, Colombia, Slovenia and Morocco), but also floods or submersions (particularly in France and Korea), with the latter risks being increased by the higher frequency of external climate events related to global warming. The occurrence of one of these risks, despite the prevention and resilience policies presented below, could harm people, the environment or the sites concerned and lead to significant disruptions in their ability to operate affected sites – potentially damaging the Group’s assets and/or overall performance (sales, revenues, income statement or balance sheet), particularly through industrial interdependencies. A global pandemic, such as the current COVID-19 pandemic, can result in significant and shifting health threats in countries where the Group operates. Such situations may be accompanied by Risk of natural, health-related or industrial disasters - medium risk

measures imposing restrictions on the free movement of people and goods, disrupting the opening of sales or after-sales outlets of distribution networks and the smooth running of industrial sites. The main impacts of such situations would be on the health and availability of the Group’s personnel and its suppliers, as well as on financial performance (sales, cash flow and cash) and, potentially, the value of certain balance sheet assets. Risk management Over the past 30 years, the Group has been committed to implementing and developing an ambitious and rigorous prevention policy (safety of people, property and business continuity). Excluding AVTOVAZ, more than 93% of the assets (industry, engineering and logistics) covered by the “property damage and business interruption” insurance program were awarded the international “Highly Protected Risk (HPR)” label in 2020, which reflects a level of prevention and protection approved by insurance companies. And in a convergent approach, the AVTOVAZ group implements fire protection and safety measures on its sites, including insurance against any risks related to the operation of industrial facilities. Furthermore, the entire Group is working to increase its resilience capacity in the face of natural disasters. In particular, a specific multi-year plan is being rolled out to optimize the treatment of seismic risk at the sites concerned: reinforcement of buildings and facilities, staff training, specific means of communication, crisis management systems, business continuity and an appropriate insurance program. With regard to the health crisis, the Group has taken actions, notably through a crisis management system, to protect the health of its employees, in conjunction with the public authorities, preserve its assets and its ability to operate, and to adapt to changes in the situation. The provisions mainly concern specific work organization, management of work interruptions and resumptions in line with local measures and commercial demand. 1.5.2.3 Risk of inadequate definition or execution of products and services - high risk with impact > probability In the continuously changing environment of the automotive markets, regulations, customer expectations and technologies, linked to societal, environmental and climate issues, the Group is exposed to a risk of insufficient match between its product and services offering and the expectations of the various markets, which could adversely impact its sales, revenues or income statement. Specific risks have been identified relating to: the enhancement of the technological content of vehicles and P related ecosystems, especially with regard to vehicle connectivity and related services and the development of electrified and, in the longer term, autonomous vehicles (see section 1.4.1 “The car of the future” of this Document); Risk linked to products and services

106 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020

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