LOREAL_Registration_Document_2017

2 Corporate governance *

RISK FACTORS AND CONTROL ENVIRONMENT

Claim activity under this programme has historically been low, which shows the extremely high quality requirements and safety standards applied by the Group in managing its operations and in designing and manufacturing its products. Property Damage and Interruption of Operations Fire, lightning, explosion, theft and natural disasters are notably insured, within the limits of the products available on the insurance market. The Group has set up a global programme to cover its property, chiefly: fixed assets and inventories (except where restrictions apply). This programme also includes a chapter on operating losses directly resulting from an insured property loss or damage. As the capacity of the insurance market is limited for certain risks, this programme includes sublimits, particularly as regards natural disasters. Finally, it also provides for prevention inspections for the Group’s sites conducted by specialist departments of the leading insurer. Transport by road, sea and air of all flows of goods The Group has set up an insurance programme to cover the transportation of all its products. All subsidiaries benefit from the protection offered by this worldwide programme, which

ensures that appropriate cover is provided (except where restrictions apply).

Customer credit risk Group subsidiaries are encouraged to purchase credit insurance, assisted by head office and under the terms and conditions negotiated, in addition to their own credit management policy, provided that insurance cover compatible with their level of commercial activity is available under financially acceptable conditions. Nevertheless, in a period of major economic slowdown, large insurance companies could scale back their commitments on the credit insurance market as they may decide to reduce their cover of amounts receivable in certain countries. The insurance policies put in place in these countries could be affected by this trend. Self-insurance Through its reinsurance subsidiary, the Group carries risk retention levels that are not material at consolidated level, and these are applicable over and above local deductible amounts. This involves one programme: "Property Damage and Interruption of Operations".

REGISTRATION DOCUMENT / L'ORÉAL 2017

132