SAINT_GOBAIN_REGISTRATION_DOCUMENT_2017

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Risks and control Risk factors

Risks associated with information 1.1.8 systems Daily management of the Group’s activities, specifically the conduct of its commercial, industrial and accounting processes, particularly in its Distribution activities, requires the proper functioning of all technical infrastructure and computer applications. The risk of system malfunction or shutdown, which may be external or internal in origin (computer viruses or hacking, service providers’ defaults, blackouts or network shutdowns, natural disasters, human error, etc.) cannot be underestimated. To minimize the impact of this type of malfunction, the Information Systems Department has set strict rules for information systems governance and security, relating to infrastructure and applications, data backups and business Cost reduction and restructuring 1.2.1 risks The Group has undertaken a variety of cost-cutting and restructuring initiatives. While further savings are planned, there is no guarantee that the forecast reductions will be achieved or that the related restructuring costs will not be higher than originally budgeted. In particular, certain restructuring operations and other initiatives may cost more than expected, or the cost savings may be less than expected or take longer than expected to achieve. An increase in restructuring costs and/or the Group’s inability to achieve the expected savings could have a material adverse effect on the Group’s results and outlook. Risks associated with the Group’s 1.2.2 pension commitments and similar commitments The Group makes significant accounting accruals to cover pension and other post-employment benefit plans, mainly in Western Europe (particularly France, Germany, the Netherlands and the United Kingdom) and in North America (United States and Canada). Most of these plans are closed to new entrants. At December 31, 2017, total commitments under pension and other post-employment benefit plans were €11.9 billion. The provision for pension plans recognized in the consolidated balance sheet (€2.9 billion at Group structural risks 1.2

continuity plans, rolled out at the Group level and controlled by the Internal Audit and Control Department. The occurrence of such malfunctions may adversely affect the Group’s operations, the protection of its know-how and its financial results. Customer credit risk 1.1.9 The Group’s exposure to customer credit risk is limited due to its wide range of businesses, worldwide presence and very large customer base. Past-due receivables are regularly analyzed and provisions are booked whenever necessary (see Note 3 to the Consolidated Financial Statements, Chapter 9, Section 1). Nevertheless, changes in the economic situation could lead to an increase in customer credit risk. December 31, 2017) may be affected by adverse changes in the actuarial assumptions used to calculate the projected benefit obligation, by a reduction in the discount rates used to measure future commitments, a change in life expectancy or higher inflation, or a fall in the market values of plan assets, consisting mainly of equities and bonds. Risks associated with goodwill 1.2.3 and impairment of property, plant and equipment and intangible assets Brands and goodwill make up a significant proportion of the Group’s intangible assets, representing €2.0 billion and €10.6 billion, respectively, at December 31, 2017. In line with Group accounting policies, goodwill and certain other intangible assets with indefinite use lives are tested for impairment periodically and whenever there is an indication that their carrying amount may not be fully recoverable. Goodwill and other identified intangible assets may become impaired as a result of worse-than-expected Group performance, unfavorable market conditions, unfavorable legal or regulatory changes or many other factors. The recognition of impairment losses on goodwill could have an adverse effect on consolidated net income. Property, plant and equipment (€11.6 billion at December 31, 2017) represent roughly one-quarter of total assets and may become impaired in the event of adverse development of the business.

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