CAPGEMINI_REGISTRATION_DOCUMENT_2017

CORPORATE GOVERNANCE - RISKS{AND INTERNAL{CONTROL

2.5 Risks and internal control

The significant use of offshore production centers in India, but also in Poland, China and Latin America, exposes Capgemini to currency risk with respect to some of its production costs. Capgemini SE is also exposed to the risk of exchange rate fluctuations in respect of inter-company financing transactions and fees paid to the Group by subsidiaries whose functional currency is not the euro (see Note{23 to Capgemini's consolidated financial statements). Risk management systems The Group implements a policy aimed at mitigating and managing foreign currency risk: production cost risks primarily concern internal flows with X India and Poland? A hedging policy is defined by the Group. Its implementation is mainly centralized at Capgemini SE level and primarily involves forward purchases and sales of currency; financial flows exchanged as part of inter-company financing X activities are primarily centralized within Capgemini and are mainly hedged (primarily using forward purchases and sales of currency); royalty flows payable to Capgemini SE by subsidiaries whose X functional currency is not the euro are also generally hedged. Risk analysis Capgemini's consolidated financial statements may be impacted by provisions for pensions and other post-employment benefits covering defined benefit plans, which are also subject to volatility. Furthermore, the Group could be faced with calls for funds to make-up pension fund shortfalls, over a short or long-time period, potentially deteriorating its financial position. The main factors of volatility risk are fluctuations in interest rates and more generally the financial markets, as well as inflation rates and life expectancy. The plan assets of the main schemes whose risks have not been transferred to the insurance market are managed by the trustees of each fund and invested in different asset classes (including equities). They are subject to market risk, as well as the performance of the management policy defined by the trustees, implementation of which can in certain cases by delegated. Under these conditions, plan assets may be less than the present value of pension obligations, reflecting a funding shortfall or deficit. Changes over time in assets and/or liabilities are not necessarily in the same direction and are eminently volatile and can increase or decrease the funding asset/liability or the resulting deficit. Nonetheless, the potential economic impact of these changes must be assessed over the mid- and long-term in line with the timeframe of the Group's pension and other post-employment benefit commitments (see Note{24 to Capgemini's consolidated financial statements). Risks relating to employee liabilities

Financial liabilities whose early repayment could expose the Group to liquidity risk mainly consist of the bonds issued respectively in July{2015 and November{2016 and some commitments in respect of employee liabilities. Risk management systems The majority of Group financing is borne by the parent company and, as such, implementation of the finance policy is largely centralized. The Group adopts a prudent finance policy based primarily on: prudent use of debt leverage, combined with limiting the X grant of contractual provisions that could trigger the early repayment of borrowings; the maintenance of an adequate level of liquidity at all times; X the active management of financial liability maturities, aimed X at limiting the concentration of borrowing maturities; the diversification of financing sources, to limit dependence X on certain categories of lenders. In this context, the Company undertook a specific review of its liquidity risk and considers it is able to meet future scheduled payments (see Note{21 to Capgemini's consolidated financial statements). Risk analysis The Group's Income Statement could be impacted by interest rate risk if unfavorable movements in interest rates had a negative impact on future net finance costs and financial flows of the Group. The Group's exposure to interest rate risk must also be considered in light of its cash position. The liquidity at its disposal is generally invested at floating rates, while the Group's debt - primarily comprising bond issues - is mainly at fixed rates (see Note{23 to Capgemini's Consolidated financial statements). Risk management systems As part of its financing policy, the Group seeks to restrict interest rate risk by opting for fixed rates for a large part of its debt. The Group favors investments offering a high level of security and generally floating-rates and as such accepts - in the event of a fall in interest rates - the risk of a drop in returns from the investment of cash surpluses (and as such an increase in the finance cost differential). Risk analysis The Group is exposed to two types of currency risk that could impact earnings and equity: risks arising in connection with the consolidation process on the translation of the accounts of consolidated subsidiaries whose functional currency is not the euro, and currency risks arising on operating and financial cash flows which are not denominated in the entities' functional currency. Foreign currency risk Interest rate risk

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REGISTRATION DOCUMENT 2017 — CAPGEMINI