Universal Registration Document 2020

2.1.2.5 Crisis management and business continuity – The example of the Covid-19 crisis

Like the Covid-19 pandemics, natural disasters (floods, landslides, earthquakes, etc.), significant climatic variations (droughts, etc.) or any other event the scope of which is difficult to predict (pandemic, major industrial accident in the world, etc.) could affect the Group’s activities; this was the case with the storms Klaus (2009), Xynthia (2010), Amelie (2019), Alex (2020) in metropolitan France, or Irma (2017) in theWest Indies, or with episodes of extreme cold (winter 2017) or heat waves (summer 2019). In the event of an exceptional incident, the measures adopted may generate costs beyond those of repairing the damage caused by the disaster and the loss of earnings from the interruption of the goods and services provided by the Group.

To meet this risk, EDF has defined a crisis management policy that takes into account the Group’s territorial presence and the importance of the Group’s industrial and public service business in the economy. This “Crisis-Management and Business-Continuity policy” defines the organisation principles and specifies the entire system necessary to its implementation. This policy consists in particular of:

• making sure of the existence of organisations for crisis management and permanent systems for raising alerts;
• checking the existence and regular update of relevant crisis-management procedures, with regard to the risks involved;
• defining, for periods of crisis, coordination procedures with all stakeholders;
• ensuring feedback from crises and crisis exercises is systematically applied in order to avoid or reduce the consequences of similar crisis;
• checking the existence and update of business continuity plans within each entity;
• checking the implementation of professional development actions for all players in the crisis.

A crisis exercise programme allows these mechanisms to be tested in terms of their effectiveness and overall consistency.

In 2019, the EDF group set up an action plan to increase the entities’ preparedness with regard to business continuity issues: in this context, the development of a pandemic crisis exercise, including the revision of the EDF group’s pandemic plan, was initiated in the summer of 2019. This work proved to be particularly useful for the management of the Covid crisis in 2020: relying on operational, preparedness and training measures, the EDF group was able to face, proactively and with foresight, the health crisis as from the end of January 2020.

Feedback after the summer of 2020 enabled the Group to approach the second lockdown with the lessons needed to continue its activity.

Lastly, to prepare for possible consequences of the Covid crisis on the supply/demand balance during the winter of 2020/2021, the EDF group took part in the preparation and implementation, in October 2020, of an “Extreme Cold” crisis exercise organised by the French Ministry of Ecological Transition and Solidarity.

2.1.2.6 Insurance

In order to protect its assets and limit the impact of certain events on its financial position, the EDF group has dedicated insurance programmes that cover its major risks in terms of property damage, civil liability and insurance of persons. Nuclear risks are subject to the specific civil liability regime described below.

Organisation

The Group Insurance Division is responsible, while respecting the management independence of the regulated infrastructure operators, for preparing the insurance policy of the EDF group and organising its implementation throughout the Group, in order to continuously optimise the overall costs of its insurable risks⁽¹⁾.

Its duties are to:

• continuously analyse cover for the EDF group’s risks in conjunction with the GroupRisk Department: analysis by business line, entity and project;
• establish rules for the Group’s entire scope that enable covering all risks that can and must be covered, as well as optimising the total cost thereof and managing volatility;
• promote and apply these rules to all Group entities, using appropriate means andin compliance with governance rules;
• develop and monitor the tools necessary to perform the above tasks, including within the subsidiaries reporting to the Insurance Division: EDF Assurances and the Group’s captive insurance companies.

The Insurance Managers of entities and controlled subsidiaries that join the Group’s programmes are responsible for:

• ensuring that all risks are insured;
• scheduling prevention inspections and overseeing implementation of the resulting recommendations;
• reviewing cover strategies and amounts declared (risk quantification);
• analysing losses and participating in claims handling.

This work, carried out in close collaboration with the Group Insurance Division, makes it possible to continuously improve the quality of information on insurable risks as programmes are renewed and prevention visits are carried out (assessment of maximum possible claims, “SMP”). In connection with prevention actions, the Group Insurance Division establishes and oversees implementation of the site inspections programmes.

We are continuing to integrate Framatome into the Group’s insurance programmes with a view to improving the coverage offered and achieving financial synergies. Framatome offers civil liability insurance for corporate officers, property and casualty insurance (not including nuclear assets), Cyber risk insurance, motor vehicle risk insurance, and nuclear operator’s civil liability insurance and related transport insurance, which has been included in the Group’s programmes since18 February 2020.

Group Insurance Policies

Purpose: the Insurance policy, validated by the Executive Committee in January 2017, specifies the risks that the Group decides to transfer to the market and the general principles for optimising these transfers: mass purchasing through the implementation of Group insurance programmes, sharing between traditional markets and other types of cover (specialised mutual insurance companies, transfer to the financial markets, etc.), individual and Group deductibles (generally, only large-scale risks are transferred) and optimisation of intermediation expenses.

Implementation methods: since 2004, an update on the situation and costs of covering EDF’s risks through insurance or the transfer of risks to the financial markets has been presented to the Audit Committee. The Audit Committee therefore receives regular updates on insurance and a review of the insurability of Group risks.

Since 2011, a Strategic Insurance Policy Committee (“COSA”), currently chaired by the Finance and Investments Director, provides an opportunity for the business lines and the Finance Department to reflect on changes to and procedures for implementing the Insurance policy, in particular the main characteristics of the programmes.

The Group Insurance Division and the Group Risk Department produce an annual analysis of the risk mapping at Group level, supplemented by the insurance coverage system in place. Based on this shared view, EDF is in a position to improve, and, where necessary, extend the coverage of insurable risks in accordance with the principles established by the Group in this area.

The goal of the Group’s insurance programmes is to integrate the controlled subsidiaries as broadly as possible, in order to homogenise risk coverage and streamline its management, on the one hand, and to control the corresponding insurance costs, on the other hand.

Insurance contracts, according to market practice, include exclusions, limits and sub-limits.