HERMÈS - 2019 Universal Registration Document

OVERVIEW OF THE GROUP RISK FACTORS

FINANCIAL RISKS

1.11.5

1

The Group has put in place an organisational structure which allows financial risks related to its business to be managed centrally. As the Group has a positive cash position, it is not exposed to liquidity risk and applies a conservative policy in managing interest rate risks.

RISK OF FRAUD ●

1.11.5.1

DESCRIPTION OF THE RISK s

RISK MANAGEMENT s

Treasury and currency management is centralised by the Group’s treasury department and adheres to strict management and monitoring rules. Administrative management and operational control are ensured by the middle & back office department, notably via the use of integrated cash flow software. The Treasury Security Committee regularly checks that these procedures have been applied and that any risks identified have been addressed. The audit and risk management department oversees proper compliance with risk monitoring and management procedures. As part of the coordination of internal control, it regularly creates awareness among the network of internal controllers about the risk of fraud and restates the specific fraud prevention procedures, in particular as regards the purchase and payment process (“Whaling”). External audits are also conducted on this process to identify and address potential weaknesses. Audits in subsidiaries to verify the proper application of procedures complement this system. Furthermore, a specific mapping exercise concerning the risk of fraud has been conducted, with action plans monitored. Awareness-raising campaigns for functions most at risk are conducted on a regular basis. Awareness-raising, identified as an effective fraud prevention tool, is rolled out and adapted to the types of fraud (risk of systems intrusion, “CEO fraud”, etc.). An ad hoc security system has also been introduced and is monitored by the Group Security department. Furthermore, a corruption risk mapping has been drawn up with the help of a specialist external firm and with the collaboration of the Director of Legal Compliance, who is responsible for its management, as described in section 2.8.3.1.2. Measures put in place by the Group to prevent computer intrusions are described in chapter 1.11.1.4.

The Group’s exposure to the risk of fraud is due in particular to its growing visibility in many countries and its increasing digital presence. The inventiveness and adaptability of external fraud attempts on defence systems seen on the market also represent threats. POTENTIAL IMPACTS ON THE GROUP s Any case of fraud could cause financial losses to the Group and tarnish its reputation.

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

55