_60 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 2 RISK MANAGEMENT Risk factors specific to Michelin, description and related management systems ● organizing the collection and treatment of end-of-life tires. The Group is exercising its influence with public and private-sector stakeholders (i) to support the efficient operation of nationwide collection and resource recovery systems; and (ii) to encourage, wherever possible, local systems to focus on materials recovery, which optimizes the reuse of tire components as secondary raw materials and offers a generally smaller carbon footprint than energy recovery. In addition, the Group itself is developing end-of-life tire recycling solutions with other market participants; ● developing services and solutions that optimize the use and management of vehicle fleets, while improving their fuel/ energy efficiency. Risk 8 – MICHELIN brands and reputation Risk factors Michelin has an excellent reputation, both in terms of its products and services and as a company. However, like any other wellknown multinational corporation, it is exposed to potential damage to its reputation and brands. In addition, the constantly growing influence of social media means that the Group is exposed to online reputational risk, at a time when information is openly and rapidly circulated. Specific nature of the risk In light of the MICHELIN brand's image and reputation (the MICHELIN brand power score is nearly two times higher than that of its nearest competitor), an attack on the MICHELIN brand and reputation would have a serious adverse effect on the Group. It is vital to safeguard the Group’s brand and reputational equity, which is one of its major assets. Governance and risk management response MICHELIN Brands and Reputation Risk Governance is the responsibility of the Corporate Engagement and Brands Department and the Lifestyle Business Line. With the support of the Corporate Internal Audit, Risk Management, Internal Control and Quality Department, and the Group's Legal Department together with its Intellectual Property Office, the above Governance body manages a full array of initiatives to safeguard the Group’s reputation and brands. Among these efficient measures is a systematic, ongoing intelligence process that analyzes online, social and other media to identify any initiatives or comments that could spiral out of control and cause long-term damage to the Group’s reputation. In addition, guidelines for the proper use of social media have been issued for all Group employees, with an update in 2022. They describe the simple rules and best practices to follow to attenuate the risks involved in using social media. The crisis management system also helps control reputational risk. Risk 9 – Pension and other defined benefit plans Risk factors In certain countries, employee benefit obligations include unfunded, partially funded or fully funded pension and other defined benefit plans that represent a long-term benefit payment obligation for the Group. The main factors impacting the amount of the obligation are returns on plan assets for the funded plans, actuarial assumptions (including the discount rate), experience adjustments, changes in legislation and plan amendments. An adverse change in one or more of these factors could increase the amount of the net obligation and consequently require the Group to make additional contributions to make up for the funding shortfall or increase future benefit payments. The Group's main pension plans in English-speaking countries are funded and have policies in place to hedge any discount rate risk. Specific nature of the risk The Group's pension and other defined benefit plans mainly concern North America and Europe. The total obligation for pensions and other employee benefits amounted to €7.6 billion at December 31, 2023. At the same date, the related plan assets totaled €5.2 billion. Governance and risk management response Governance for this risk factor is provided by the Global Employee Benefit Board (GEBB), which is co-chaired by the Deputy Chief Financial Officer and the Executive Vice President, Personnel. For details on provisions for employee benefit obligations and the measurement and treatment of defined benefit plan risks, see note 27 to the consolidated financial statements.
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