PERNOD-RICARD - URD 2020-21

____ 4. RISK MANAGEMENT RISK FACTORS

3. Cyberattack

RISK IDENTIFICATION AND DESCRIPTION

POTENTIAL IMPACTS ON THE GROUP

The Group’s digital transformation has brought with it greater exposure to risks stemming from cyberattacks, as well as those related to IT and telecommunications system failures. These systems are of inestimable importance to the Group’s day-to-day operations, in particular regarding processing, transmission and storage of electronic data relating as much to the Group’s operations and financial statements, as to the communication between Pernod Ricard’s personnel, customers and suppliers. In addition, more stringent personal data protection regulations, including the General Data Protection Regulation, increase the risks associated with regulatory non-compliance.

Potential impacts of a cyberattack and its effects depend on the nature of the attack, but could include: leakage, loss, theft of personal, strategic or confidential data, and the resulting chain of potential repercussions; system failure; and incapacity to perform day-to-day operations. Although the Group invests a significant amount in maintaining and safeguarding its IT systems, particularly in view of growing threats in terms of cybercriminality, any malfunctions, significant disruption, loss or disclosure of sensitive data could disrupt the normal course of business, and have financial, operational or reputational consequences. Lastly, the Covid-19 pandemic has caused a spectacular rise in teleworking within the Group, which has shaken up traditional ways of organising work, while at the same time presenting attackers with increased opportunities to launch cyber-attacks.

RISK CONTROL ANDMITIGATION Pernod Ricard has drawn up a cybersecurity roadmap based on the establishment of dedicated governance and resources. The Group has taken out a “cyber-insurance” policy and is striving to strengthen the security of its infrastructures, websites and networks. Infrastructure monitoring and management is performed constantly. IT and security audits are regularly performed to assess whether the level of security is adequate; they give the Group a good overview of the reliability of its IT systems. In addition, awareness-raising campaigns are conducted. Lastly, tests are carried out on the recovery of the Group’s IT systems following a hypothetical cyberattack, and a plan has been designed to facilitate the recovery of data as efficiently as possible.

4. Fast changing consumer behaviors

RISK IDENTIFICATION AND DESCRIPTION

POTENTIAL IMPACTS ON THE GROUP

Difficulties in detecting and predicting future consumer behaviour could result in under-investment in categories, products and channels that turn out to be strong or conversely over-investment in those that are running out of steam. Over time, Pernod Ricard could lose market share or miss out on growth opportunities and damage its brand image and/or reputation.

Accentuated by the Covid-19 pandemic, the trend in consumer behaviour has accelerated, in terms of product offerings (artisanal spirits, trend for little or no alcohol), purchasing preferences (e-commerce, fast delivery) or dialogue and brand experiences with (digital marketing, cross-channel points of contact, etc.). Pernod Ricard needs to adapt its organisation, portfolio, business model and market access routes to these new trends and continue to innovate, always placing the consumer at the centre of its decisions and marketing and commercial choices.

RISK CONTROL ANDMITIGATION To mitigate risk, Pernod Ricard acts across its entire organisation:

the Consumer Insights organisation studies and improves knowledge of consumer behaviour and societal changes in the Group in order to anticipate changes in trends. This was strengthened in 2019 by its centralisation and the creation of relays in the markets as well as by the intensification of social listening resources; innovation hubs have been created in the regions to develop products and services with high added value, both for the Group and for its consumers and users. In addition, an agile TLO experimentation method (Test, Learn, Optimise) has been set up; from a strategic standpoint, the diversification of the business model, market access methods and portfolio management are closely monitored and changes deemed relevant are implemented. For example, the Group entered the direct-to-consumer sales channel with the launch of Drinks&Co, a brand bringing together an online marketplace and physical stores. Moreover, the creation of Conviviality Ventures in 2017 also makes it possible to invest indirectly in new activities that complement those of Pernod Ricard by benefiting from the rich and innovative start-up ecosystem; finally, the Group continues its in-depth digital transformation. The six transformation priorities have been brought together in Key Digital Programmes. They make it possible to continuously improve the effectiveness of marketing and sales processes and to identify the maximum opportunities in the relationships that are established with the various partners through incubated programmes. These programmes are based on the in-depth exploitation of data and the latest available technologies such as machine learning algorithms.

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PERNOD RICARD UNIVERSAL REGISTRATION DOCUMENT 2020-2021