PSA_GROUP_REGISTRATION_DOCUMENT_2017

GROUPE PSA Risk Factors

CONCENTRATION RISK

LEGAL AND ARBITRATION

1.5.3.5.

1.5.4.1. PROCEEDINGS

Risk factors The concentration risk addressed by BPF is the risk of over-heavy exposure to a given customer from credit transactions and to a given counterparty in bank refinancing transactions. Risk measurement, management and control Concentration indices are used to measure this risk. Compliance with the indices is assessed during the Risk Management Committee or ALCO meetings. BPF factors in Groupe PSA’s rating when determining the level of its commitments to the latter. Definition of risk and risk factors Operational risk is defined as the risk of loss arising from inadequacy or failure attributable to procedures, BPF employees, internal systems or external events, including events that, although very unlikely to happen, would carry a high risk of loss. It is distinct from non-compliance risk and reputational risk. Risk measurement, management and control BPF is primarily exposed to operational risks linked to credit risk, external fraud and, to a much lesser extent, the risks inherent in outsourcing activities to contractors or partners. Risk management mechanisms are incorporated into instructions and second-tier checks are carried out by the permanent control functions. Risk is also managed via decision-making and authorisation rules or special solutions incorporated into the IT systems (such as the Disaster Recovery Plan). OPERATIONAL RISKS 1.5.3.6.

As at 31 December 2017, no Group company was involved in any claims or litigation that had a material impact on the consolidated financial statements. During the last 12 months, there were no governmental, legal or arbitration proceedings that may have, or have had, significant effects on the Group’s financial position or profitability. To the best of the Group’s knowledge, no such proceedings are pending or threatened. Établissements Peugeot Frères initiated arbitration proceedings against a Group subsidiary, Automobiles Peugeot, concerning the ownership and use of the “Peugeot” brand, excluding vehicles, in 2015. These proceedings are still ongoing and the Group is confident about their outcome. Concerning the provisions for commercial and tax litigation, and other disputes, please refer to Note 10 to the 2017 consolidated financial statements, Section 5.6 below. LEGAL RISKS ASSOCIATED 1.5.4.2. WITH ANTI-TRUST LITIGATION Risk factors Like all economic operators, Groupe PSA is exposed, in France and in the countries where it operates, to legal risks related to competition law. The identified risks have been mapped, and mainly concern the areas of procurement, trade and cooperation. The Group might become the subject of investigations by the competition authorities. In the event anti-competitive practices are proven, possible sanctions include administrative fines, criminal penalties and/or liquidated damages. The Group is at present unable to predict the consequences of such investigations, including the administrative, criminal and/or fines civil sanctions that could be imposed. Risk management and control processes To avoid these risks, the Group, both centrally and in the countries where it operates, has internal and external legal counsel, experts in competition law, working closely with the relevant businesses. In addition, since 2013 the Group has carried out permanent training in competition law for operational managers who may be faced with the risk of anti-competitive practices, specifically in the commercial area. In 2017, these actions continued and expanded across the Group, which strengthened its competition compliance programme through several initiatives (11 commitments made to the French Competition Authority in 2014), including: the implementation of a whistleblowing system in France; „ training sessions (in-class and e-learning) for the employees „ concerned, to teach them the appropriate responses and the behaviours to avoid, using practical examples.

Legal and contractual risks 1.5.4.

Groupe PSA is exposed to legal risks as an employer and in connection with the design, manufacturing and distribution of vehicles, the purchase of components and the supply of services. To manage these risks, the Group implements preventive policies covering workplace health and safety, industrial and intellectual property, the manufacturing environment, vehicle safety, product and service quality and the security of the Group’s transactions from a legal standpoint.

31

GROUPE PSA - 2017 REGISTRATION DOCUMENT