HERMÈS - 2019 Universal Registration Document

OVERVIEW OF THE GROUP RISK FACTORS

OBJECTIVES OF RISK MANAGEMENT

programmes for new managers and special training, imparts to each individual a thorough understanding of their role in the organisation and the need to abide by the Group’s code of conduct and rules of behaviour. The demanding quality-oriented values and mentality shared by all employees serve as a solid foundation to underpin behaviours and observance of stringent internal control policies and procedures. The way in which these values work together and their balance are contingent, on the Company’s ingrained risk management and internal control culture, management style and corporate ethical values. With this in mind, to underpin the risk management culture promoted by the Group, a formal ethical charter was adopted and disseminated to its employees in 2009. In 2012, it was completed by the code of business conduct, that sets out the behaviour expected from Group employees. These two documents, translated into 12 languages, were updated in 2016 and subsequently in 2018 and aim to enhance the dissemination of the rules of conduct that underpin the Hermès Group’s integrity and ethics: the Ethical Charter aims to promote compliance and to ensure the s proper application of laws, regulations and key principles. It is intended as an instrument of progress and dialogue, and encourages employees to discuss with their line managers in cases where the principles are difficult to apply or are open to misunderstanding; the purpose of the code of business conduct is to raise employees’ s awareness about certain risks and to instil behavioural and alert reflexes. Moreover, an anti-corruption code of conduct was also rolled out for all employees in 2019 and translated into 17 languages. These documents are available on the Company intranet under “Our Ethics” and on the website (https://finance.hermes.com), and are subject to formal acknowledgement of receipt when given to employees. Additional training sessions on anti-corruption laws have also been organised for operational staff. However, no risk management and internal control system, no matter how well-designed and applied, can provide absolute certainty that the Company will achieve its objectives.

1.11.7.1

1

AT HERMÈS INTERNATIONAL

Risk management systems are designed to frequently examine the major risks. This includes methods for identifying and prioritising internal and external risks and for handling the main risks at the appropriate operating level in order to reduce the Company’s exposure.

Major risk identification

Risk re- assessment

Risk ranking

Risk management system at Hermès International

Definition of a risk control strategy

Management of main risks

CONTROL ENVIRONMENT

1.11.7.2

While Hermès has attained the stature of an international group, it has also retained its human dimension, with family ideals. The Company is dedicated to a culture and spirit of craftsmanship and seeks to cultivate strong values among its employees. Among these values, quality is paramount – the very essence of Hermès’ business. The Group’s commitment to quality applies not only to its products and services, but also to its management methods. Hermès attaches great importance to its Senior Executives’ Managerial skills. The Hermès culture, which is propagated mainly through integration

SCOPE OF THE RISK MANAGEMENT AND INTERNAL CONTROL SYSTEMS

1.11.7.3

The Group’s risk management and internal control mechanisms are applicable to the parent company and to the controlled subsidiaries as presented in the notes to the consolidated financial statements.

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

59