Danone // 2020 Universal Registration Document

2 Overview of activities, risk factors 2.6 Risk factors DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 21 Methodology This risk mapping is prepared and updated bi-annually by the Company FinanceDepartment. This process is part of annual strategic planning and results in the development of the new mapping with its related preventive actions. The following methodology is used: • identification of the risks considered as material by Reporting Entity with support from the main corporate transversal func- tions and integration of systemic risks not perceptible at the subsidiary level; • consolidation of the major risks of the Reporting Entities at Company level and integration of systemic risks not perceptible at the Reporting Entity level; • ranking of risks based on their likelihood of occurrence and estimated financial impact, at the level of a Reporting Entity or of the Company; • determination of preventive or corrective actions, which may be cross-functional or specific to the Reporting Entities. Risk monitoring For each Reporting Entity, the most significant risks are reviewed twice a year at special meetings attended by the General Manager and Chief Financial Officer of the Reporting Entity and the Head of Strategic Planning. A review of the most significant risks is also presented twice a year by the Head of Strategic Planning to the Chief Executive Officer and Chief Financial Officer. A mapping of Danone’s major risks and risk mitigation plans are reviewed and assessed. This work serves as the basis for the presentations made to the Executive Committee and Audit Committee. MAIN RISK FACTORS The summary table of main risks specific to Danone hereafter presents the classification of the risks in 3 categories: (1) Strategic risks, (2) External Environment risks and (3) Operational risks. Danone’s main risks have been assessed on the basis of the probability of their occurrence and the expected magnitude of their negative impact, after taking into account risk management measures effect, to give an assessment of the materiality of each risk. The most material risks are mentioned first in each category and the materiality of each risk is disclosed by using a three-level rating scale ( strong , medium , low ) as follows. . Strategic risks strong Over reliance on principal markets strong Packaging strong Fast changes in consumer preferences medium Retail shift low External growth & integration External environment risks strong Unpredictability of duration and effects of the Covid-19 pandemic medium Regulatory changes medium Raw materials price volatility & availability medium Impact of climate change on value chain medium Currency volatility Operational risks medium Cybersecurity medium Food safety & product quality issues low Shortage of talent The description of main risks specific to Danone, with their negative impacts and measures implemented to manage them are set out hereafter.