PERNOD RICARD - Universal Registration Document 2019-2020

4. RISK MANAGEMENT Risk factors

Major litigation 2.

RISK IDENTIFICATION AND DESCRIPTION

POTENTIAL IMPACTS ON THE GROUP

Like other companies in the Wine & Spirits sector, the Group may be the subject of legal action or other litigation and complaints from consumers or government authorities. In addition, the Group routinely faces litigation in the normal course of business. The Group records provisions for all disputes in which it is involved and all risks it faces. At 30 June 2020, these provisions totalled €431 million, compared with €374 million at 30 June 2019 (see Note 4.7– Provisions to the consolidated financial statements).

Major litigation of any type could have an adverse impact on the Group’s financial position (in the event of a fine or damages), or the Group’s image and reputation due to media coverage and posts on social networks, and may result in the loss of rights (in the event of the cancellation of a trademark or termination of a sourcing contract).

RISK CONTROL AND MITIGATION To avoid litigation, the Legal Department, in charge of the Group’s protection and defence, has implemented preventive measures. Marketing and operational teams are made aware of legal issues on an ongoing basis, model agreements are made available, and the legal teams provide support in the very early stages of projects. Legal functions have been established at the regional and local levels to ensure better local monitoring. Lastly, a quarterly report listing the major risks identified by local legal teams, particularly with regard to compliance, counterfeiting, cyberattack, personal data and potential major disputes is sent to staff at Headquarters, who are responsible for coordination.

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Pernod Ricard Universal Registration Document 2019-2020