03 Risk management Risk management system 3.1.1 SYNCHRONIZATION BETWEEN INTERNAL AUDIT, RISK MANAGEMENT AND INTERNAL CONTROL Internal Audit, Risk Management, Internal Control and Quality activities have been brought together within a single Corporate Department, which provides a shared vision of the priority risks and challenges facing the Group. It also supports efficient follow-up and drives improvement synergies between the second (Risk Management and Internal Control) and third (Internal Audit) lines of defense across every timeframe and every Group unit. 3.1.2 RISK MANAGEMENT PROCESS To secure and implement the Group’s risk/impact management strategy, Risk Managers have been appointed in the Business Lines, Operational and Corporate Departments, Regional Organizations and other units. They are tasked with two main missions: n helping to instill a risk culture in their unit; n leading, deploying and overseeing the risk management process in their unit. The Risk Manager network is led by the corporate Risk Management team in the Corporate Internal Audit, Risk Management, Internal Control and Quality Department. In addition, the corporate team is responsible for tracking risks, maintaining alignment between the Group and Regional risk maps, and managing the Group’s risk/impact portfolio and the associated risk/impact policy. Group risk maps are informed solely by the assessments performed by the Corporate Internal Audit Department. As part of the CSRD(1) project, the corporate Risk Management team has ensured that the portfolio of risks and impacts tracked by the Group as part of its risk management process is properly aligned with the double materiality matrix prepared for CSRD compliance. 3.1.3 INTERNAL CONTROL PROCESS Objectives of the internal control process The Group's internal control process has the following core objectives: n application of the instructions and guidelines issued by the Managers and the Group Executive Committee; n compliance with laws and regulations; n the proper functioning of internal processes, particularly those relating to the protection of corporate assets; n ensuring the reliability of financial and non-financial information. It comprises a set of resources, procedures, practices and actions aligned with the characteristics of the Group’s businesses, which: n contribute to the control over its activities, the efficiency of its operations and the efficient utilization of its resources; n enable the Group to assess all of its material operational, financial and legal risks appropriately. In general, the risk management process has been designed to encourage informed, shared risk-taking in accordance with the Group's values of responsibility, integrity and ethical behavior. Michelin intends for Internal Control to become a tool for managing both its operations and the performance of line personnel, so that it can enjoy the benefits of efficient governance and the reasonable assurance that its risks are under control. Scope of the internal control process The Group ensures that the internal control process is implemented in every unit: n The system covers all the Group’s operations, including every operating region and every business unit (manufacturing, sales and dealership networks). In the event of an acquisition, a dedicated internal control system is deployed in the new unit, in alignment with its business and risks. The scope of internal control is broad and extensive, covering every potential area of major risk. n In extending the internal control process, the Group has updated and broadened it to address risks relating to the reporting of non-financial information. It will cover all the activities involved in collecting data and metrics, and in consolidating and publishing information as part of the nonfinancial reporting process. n To manage this system in a cross-functional and consistent manner across all Group activities, the Internal Control Department has been integrated into the Corporate Internal Audit, Risk Management, Internal Control and Quality Department. An Internal Control network is organized and led through the Quality Network, with training and collaborative spaces made available to all the employees who participate in the network. A detailed description of the internal control process covering the preparation of accounting and financial information is provided in section 3.3. (1) Corporate Sustainability Reporting Directive, see section 4.1 of this Universal Registration Document. 157 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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