Integrated Annual Report FY24

Managing our risks

Managing our risks

Faced with a range of both internal and external risks that could prevent the Group from reaching its objectives, Pernod Ricard has implemented a system of internal control and risk management aimed at improving the forecasting and monitoring of these risks. Each function and affiliate contributes on a continual basis to the deployment and improvement of this disciplined approach.

Methodology:

In 2024, the Group carried out an in‑depth review of its risk map, a risk management tool, to take into account the major changes in the risk environment to which the Pernod Ricard Group is exposed. Top management actively participated and all Pernod Ricard functions and affiliates were involved. This map visualises the issues at stake, without replacing the explanations provided in chapter 4 of our FY24 Universal Registration Document.

4 Breach of compliance requirements (Impacts of risks: Medium, Likelihood of occurrence: Medium) Failing to meet with compliance requirements and business ethics, which can lead to negative consequences for the Company. Taxes and levies (Impacts of risks: Medium, Likelihood of occurrence: Medium) Changes in tax regulations or in indirect taxation, in particular customs duties and excise taxes on alcoholic beverages, which could have a material impact on the Group. Supply chain disruptions (Impacts of risks: Medium, Likelihood of occurrence: Medium) Major unpredictable event complexifying the access to markets; key supplier failure; unavailability of raw material. Disruption of demand and consumer behaviour (Impacts of risks: Medium, Likelihood of occurrence: Medium) Demand and consumer behaviours changing at a fast pace in terms of expectations and trends (product categories, distribution channels, consumer experiences). Health & Safety (Impacts of risks: Medium, Likelihood of occurrence: Medium) Severe accident involving an employee or contractor as a result of a criminal or industrial incident. Information Systems & Cybersecurity (Impacts of risks: Medium, Likelihood of occurrence: Medium) Information systems disruption and failure or cyber intrusion compromising systems, websites and data integrity. Negative media coverage (Impacts of risks: Medium, Likelihood of occurrence: Medium) Impacting the image of the Group and/or its key brands.   5 Illicit trade and parallel markets (Impacts of risks: Medium, Likelihood of occurrence: Medium) Parallel trade, counterfeit and look-alike products, damaging brand image and impacting sales. Misuse of Artificial Intelligence (Impacts of risks: Medium, Likelihood of occurrence: Medium) Resulting from unawareness, lack of understanding, poor data quality ingested, including ethical concerns like disinformation and misinformation. 6 Financial risks (FX, interest rates, credit, pensions) (Impacts of risks: Medium, Likelihood of occurrence: Medium) Unfavourable evolution of exchange and interest rates or the failure of customers leading to non-collection of receivables. Unanticipated increase of pension fund’s deficits and/or cash contributions. Fraud (Impacts of risks: Medium, Likelihood of occurrence: Medium) Resulting in financial losses or the leakage of sensitive information. Major litigation (Impacts of risks: Medium, Likelihood of occurrence: Medium) Against Pernod Ricard, its affiliates, its brands or its management. Social tension (Impacts of risks: Medium, Likelihood of occurrence: Medium) Resulting from increased divisions and conflicts within the Society or from difficult interactions with employee representative bodies. Talent management (Impacts of risks: Medium, Likelihood of occurrence: Medium) Inability to attract, develop and retain talent. 7 Environmental damage (Impacts of risks: Medium, Likelihood of occurrence: Low) Environmental damage caused by our activities. Product quality issues (Impacts of risks: Medium, Likelihood of occurrence: Low) Leading to customer discontent and brand image deterioration.