PERNOD RICARD - Universal Registration Document 2019-2020

4. RISK MANAGEMENT Risk factors

Talent management  (1) 8.

RISK IDENTIFICATION AND DESCRIPTION

POTENTIAL IMPACTS ON THE GROUP

Pernod Ricard’s success depends on the commitment of its employees and its ability to attract and retain them as well as develop their skills, particularly in highly-competitive labour markets, such as Asia, Africa and Eastern Europe, where turnover rates are higher than in the rest of the world. This competitive talent market is heightened by the search for scarce skills (e.g. digital) and by changes in the aspirations of new generations. Moreover, employee development through geographic mobility is a key issue (diversity of career paths, management of the partner’s career, cost control, etc.).

The Group is aware that talent management must remain an area of long-term vigilance to ensure the sustainability of the business and ensure the transmission of key know-how within the organisation. Excessively high turnover or unduly long job vacancies could have a financial impact and demotivate teams. This could potentially slow the implementation of key Group development projects and have an adverse impact on its business, results or reputation.

RISK CONTROL AND MITIGATION To mitigate risk, the Group has established an ambitious skills development policy facilitating dynamic career management. Accordingly, shared processes and tools have been developed to allow all affiliates to optimise the assessment of skills and performance, to formalise the detection of potential, to encourage internal mobility and to monitor employee satisfaction. Moreover, Pernod Ricard University trains the Group’s future leaders through leadership development courses. Lastly, measures are carried out regularly to improve quality of life at work. They include the facilitation of telework, measures related to well-being at work, the modernisation of workspaces and managerial awareness-raising programmes.

Fraud 9.

RISK IDENTIFICATION AND DESCRIPTION

POTENTIAL IMPACTS ON THE GROUP

Pernod Ricard is exposed to the risks of fraud, notably due to its presence in a wide range of countries as well as its accelerating digitalisation, and to constantly evolving threats.

From theft to cybercriminality, any type of occurrence could lead to financial losses (including legal costs to recover defrauded sums and products), leakage of sensitive information or theft of major physical assets. It could also have a significant impact on the Group’s reputation.

RISK CONTROL AND MITIGATION To mitigate risk, the Group has implemented training measures (e.g. the MOOC on internal control) to raise fraud awareness among Pernod Ricard employees. In addition, a strong internal control framework – relying on the Group internal control principles and related tools – has been set up across the Group to limit the risk of occurrence. Further, the Group conducts internal and external audits each year to ensure the effectiveness of measures in place.

(1) Note that this risk is also covered in Section 3.3.2.1 of the Extra-Financial Reporting.

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Pernod Ricard Universal Registration Document 2019-2020

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