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INTERNAL CONTROL AND RISK MANAGEMENT Risk factors and control mechanisms in place

In addition, the deployment of internal control helps strengthen and harmonize processes related to the implementation and operation of information systems, as well as protection and access to system and network conditions.

The very nature of the activity of data processing in a changing environment in terms of the scope of Group activity and the information systems used makes IT risk management a process of continuous improvement.

3.6 – RISK FACTORS AND CONTROL MECHANISMS IN PLACE

At the date of this Registration Document, the risks described below are those identified by the Group as possibly having a material impact on its business, image, financial position, results or its ability to achieve its objectives. Other risks that are not

identified, emerging or appearing as significant at the said date, may also have an adverse effect on the Group. All the identified risks and threats are analyzed on a regular basis as part of the risk management process outlined in section 3.3 of this Registration Document.

The table below summarizes the key risks and associated control systems.

Risk factors

Structural risk reduction criteria and main systems in place

Strategic risk

3.6.1

W Global presence W Sectoral diversity of the offering and new growing business activities W Monitoring current events and activities by geographic region

Political, social and economic environment

3.6.1.1.

W Market intelligence W Investment in R&D and marketing W Cost controls W Cost of sales management W Development of e-commerce

Competitive environment

3.6.1.2.

W Chief Digital Officer and digital acceleration plan W Eliot program W Dedicated team for Innovation and Systems & the Cross-functional innovations program W Innovation and R&D W Strategic partnerships

Disruptive technology and digital transformation

3.6.1.3.

W M&A team W Rigorous due diligence process W A proven integration process based on multidisciplinary expertise W Dedicated department and network of correspondents within the Group W Occasional recourse to experts W Use of consulting firms with an international reputation

Acquisitions & docking

3.6.1.4.

Intellectual property

3.6.1.5.

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REGISTRATION DOCUMENT 2017 - LEGRAND