Cap Gemini - Registration Document 2016

PRESENTATION OF THE GROUP AND ITS ACTIVITIES

1.7 Risk analysis

(industrial disputes and strikes, wage inflation, which is particularly rife in the IT sector, inadequate domestic infrastructure and higher taxes). Asia and Latin America, political and social instability in some regions of India and adjoining countries, and even terrorist attacks. From an economic standpoint, our Group is exposed to the negative effects of countries with insufficiently controlled growth Sending employees to countries which are geopolitically unstable may expose the Group to risks regarding the physical safety of these employees. Economic instability and poorly controlled growth can also be a source of risk for the Company’s performance and reputation. The risk of natural disasters in certain countries where we are established, political instability and even terrorist attacks and similar risks in countries where we may be called on to work in response to client requirements, could impact the physical safety of our employees. Economic uncertainty in an unstable environment generates many other risks (galloping inflation and its impact on wages, poorly adapted infrastructures, unstable fiscal and social environment, etc.), which could impact our economic performance. departure. Furthermore, these organizations also help resolve any potential difficulties encountered by employees assigned to work in these countries and provide risk prevention training courses prior to their independently the risk exposure in each country. Accordingly, some countries are subject to strict travel bans. The risk is reassessed continuously based on the geopolitical position and warning systems are used to inform employees of country risks. the Group conducts engagements in order to satisfy the demands of its major clients. Specific contracts have been agreed with organizations specialized in managing these risks to assess offer satisfactory guarantees in terms of individual security. Work on client engagements in certain countries classified as “at risk” is subject to approval by the Group Review Board. Rules and procedures have been drawn up for “at risk” territories in which The Capgemini Group restricts operations to countries able to Strict approval criteria must be met before employees are sent to work in countries where there are no existing Group operations, and even stricter criteria apply in the event that employees are sent to countries considered “at risk”. Every employee required to work abroad receives specific training. Finally, a dedicated international insurance program provides assistance to all employees covering their security, medical emergencies and potential repatriation (for more information please refer to the Insurance section of this document). 2016, the Group strengthened its security policy and its Crisis. In addition, following the terrorist attacks in France in 2015 and Risk management systems

or a technical (fire or natural event) or human (error/negligence or malicious act) incident could generate additional risks. The bankruptcy of a supplier, its takeover by a competitor (and a change in its current service offer/product range), a change in its sales model, such as the use of Cloud Computing for IT services, party, budget overruns, the use of unapproved suppliers and purchases that do not comply with equipment strategic decisions, can also generate risks. Finally, the poor management of expenditure incurred with a third management systems The Group has signed framework agreements and contracts with its suppliers containing clauses similar to those contained in contracts signed with its clients, in a bid to improve the framework agreements and contracts clearly stipulate obligations with respect to delivery deadlines, service level and operating tests as well as penalties for non-compliance. The Group policy defines in great detail the supplier and sub-contractor selection process management of contractual risks and acceptance risks. These certain number of strategic contracts with major and financially and method. Over recent years, the Group has signed strategic partnership contracts with a diversified group of major suppliers in order to preserve its independence and guarantee the sustainability of its services. Furthermore, the Group has signed a established in order to remedy the failures, if any. sound suppliers. Finally, the related risks represented by smaller suppliers and/or start-ups are analyzed and back-up plans are In parallel, Capgemini has implemented a tool allowing for worldwide procurement management and monitoring. This tool, known as GPS (Global Procurement System), is used for the issue and approval of purchase orders. The procurement tool contains an approval chain that ensures the correct allocation of costs to projects and permits their control and provides specific methods for financial approval. The centralized management of data in this procurement base enables us to control and better manage Group expenditure and supplier selection. Suppliers are selected by a specialized team based on rigorous procedures using multiple criteria, several of which concern ethical standards and sustainable development. Risk factors Capgemini has permanent operations in approximately 40 countries. The bulk of its revenues are generated in Europe and North America, which are economically and politically stable. Nonetheless, an increasing portion of its production is based in emerging countries, and primarily India, which now represents approximately 50% of the Group’s total headcount. In addition, Capgemini is exposed to the risk of natural disasters in South East Geopolitics

1

Legal risks 1.7.4

well as our suppliers and sub-contractors (software, IT hardware, host sites, etc.) when implementing tailored solutions. Each a given project are covered by contracts signed with our clients as Capgemini Group provides a range of services to its clients who in turn operate in a variety of business sectors. All services relating to

contract is governed by specific regulations that could negatively impact our activities. Other factors such as the size and geographical locations of the Group also expose it to legal and tax risks.

31

Registration Document 2016 — Capgemini