Carrefour - 2017 Registration Document

MANAGEMENT’S DISCUSSION AND ANALYSIS AS OF DECEMBER 31, 2017 Risk management 2017 REGISTRATION DOCUMENT | CARREFOUR 4. 200 Quality of financial management, budgets and reporting The organisation and procedures for financial and accounting matters are set forth in the Group’s Reference Guide to Corporate Rules, which applies to all subsidiaries. The procedures and tools used are intended to control financial flows in all countries where the Group operates, to verify that budgets and forecasts best reflect observed trends, to prepare a realistic estimate of future performance, and to ensure that the Consolidated Financial Statements provide a true and fair view of the Group’s financial position and results. Financial services 4.7.1.5 Financial services distribute consumer credit, savings products, insurance products and payment services, exposing them to classic financial risks (risks of providing financing and insurance, risks related to financial ratios, liquidity risk, etc.) along with regulatory obligations to which financial and banking institutions are subject, specifically systems to combat money laundering and terrorism financing. Carrefour Banque has a risk management procedure and a map of processes for managing credit risk. Carrefour Banque has defined materiality thresholds for incidents uncovered through internal control procedures. Credit risk To protect against default by borrowers, the Group’s finance companies have set up systems to check the quality and repayment capacity of their customers. These include: decision-making aids such as credit scoring applications, ● income/debt simulation tools and credit history checking procedures; interrogation of positive and negative credit history databases, ● where they exist; active management of collection processes; ● credit risk monitoring and control systems. ● Within each credit company, a Credit Risk Department is responsible for all of these processes, and the Board of Directors receives copies of all Credit Risk Management Committee reports. At Group level, a Credit Risk – Europe unit has been set up to oversee and implement credit risk management policies in France, Spain, Belgium and Italy. Detailed information on the Group’s exposure to credit risk appears in Note 12.7 to the Consolidated Financial Statements. Risk prevention and management system 4.7.2 The risk prevention and management system implemented by the Group relies primarily on identifying, analysing and addressing major risks likely to affect people, assets, the environment, the Group’s objectives or its reputation. Risk represents the possibility of an event occurring that could affect the Group’s personnel, assets, environment, objectives or reputation. Risk management is a dynamic system comprising a set of resources, standards of conduct, procedures and actions adapted to the individual characteristics of the Company and its subsidiaries, which enables the Group’s Executive Management to keep the risks at a level the Group deems to be acceptable. Its main objectives are to: create and preserve the Group’s value, assets and reputation; ● increase the security of the Group’s decision-making and ● procedures to promote the achievement of objectives; spur Group employees to adopt a shared vision of the main risks ● and raise their awareness of the risks inherent in their business. The risk management system has several objectives and is based on a cross-functional approach with people as its core pillar: risk management aims to anticipate rather than incur risks; ● it gives executives an objective, overarching view of the ● Company’s potential threats and opportunities, enables them to take risks on a controlled, considered basis and supports the decision-making process; the development of a positive risk management culture helps to ● raise awareness and consideration of all factors and creates an environment that fosters accountability, initiative and innovation. Effective risk management relies on a shared vision of challenges and optimal coordination. The Group incorporates risk management into its day-to-day business practices. Risk management is a job shared by all employees with the aim of developing a risk management culture. For example, the Group launched three projects during the year: implementing the requirements of the European Regulation of ● April 16, 2014 on market abuse, which came into effect on July 3, 2016 and replaced the January 28, 2003 European Directive, establishing new rules and measures applicable to listed companies and their Executive Officers and Company Officers regarding inside information. The Group has adapted its internal procedure pursuant to this new EU regulation. A Stock Market Ethics Charter has been circulated to the relevant people and sets out the rules that apply with regard to: management of insider lists (permanent and occasional) and ● lists of persons with access to sensitive and confidential information subject to confidentiality requirements, information and communication with insiders and persons ● subject to confidentiality requirements, procedure for deferring the disclosure of inside information, ● and disclosure of Directors’ and Executive Officers’ share dealings;