Universal Registration Document 2022

2.2 Risks to which the Group is exposed

The Group operates in a fast-changing environment that entails numerous risks of various kinds: they may be regulatory, strategic or operational. Some are exogenous; others are endogenous and inherent to the Group’s business lines. Their consequences may affect the Group’s operating results, the Group’s financial position and its ability to finance its strategy or development. They may also affect its internal or external stakeholders or environment, or its reputation.

The Group describes hereinafter the specific risks to which it considers itself exposed, and the corresponding main control actions, without overriding the managerial independence of regulated infrastructure operators. For non-specific risks, the absence of a risk description in this section does exclude their being taken into account.

The risks must be read in their entirety, as some of them may be interdependent. Risks are divided into five categories described in sections 2.2.1 to 2.2.5:

• Section 2.2.1 “Market regulation, political and legal risks” describes the risks related to changes in public policy and regulation in the countries and territories where the Group operates, as well as the legal risks to which the Group is exposed;
• Section 2.2.2 “Financial and market risks” describes the risks arising from exposure to the energy markets in which the Group operates, as well as risks related to changes in the financial markets and the reliability of the related information;
• Section 2.2.3 “Group transformation and strategic risks” describes the risks related to the Group’s ability to adapt, particularly in terms of strategy and skills, in response to the needs for transformation brought about by climate change, new competition, and technological and societal changes;
• Section 2.2.4 “Risks related to operational performance” describes the risks related to the control of the Group’s operating activities across its various industrial projects and activities. In particular, this section describes the Group’s risk relating to current and/or future EPR projects, which is a major risk;
• Section  2.2.5 “Specific risks related to nuclear activities” supplements section 2.2.4 for activities relating to the Group’s nuclear activities (nuclear safety, operation, fuel cycle and long-term commitments).

The risks are outlined in detail in each of the relevant sections for their respective category. They are numbered to make it easier to connect the summary table and the detailed descriptions that follow.

The aftermath of the Covid crisis, and the consequences of current geopolitical tensions, particularly the Ukraine conflict, drive inflation and cause disruption on the various markets. These factors are treated as factors aggravating the following risks:

• energy market risk (Risk 2A): increased volatility, upward pressure on prices and reduced liquidity, and the impact on regulatory changes (Risk 1A);
• operational continuity of supply chains and contractual relationships (Risk 4B): inflationary pressures, disruption of industrial supply chains for products or equipment from countries affected by the conflict, disruption of contracts with companies affected by economic sanctions against Russia;
• financial risks in section 2.2.2 “Financial and market risks”, particularly the liquidity risk;
• damage to assets including cyber-attacks (Risk 4D): increase in cyber threats.

All the risks identified in this document have been selected because they are significant in terms of the materiality of their estimated impact on the Group. In addition, they are prioritised based on a qualitative assessment of their criticality, taking into account simultaneously the significance of the potential impact for the Group, the probability of their occurrence and the level of control, in light of the actions undertaken. This prioritisation produces a three-level scale for all risks: the criticality can be considered strong, intermediate or moderate. The categories are not ordered hierarchically.

As a general rule, the scope of exposure is France, Belgium, Italy, the United Kingdom and all countries in which the Group is present. Where the scope of exposure is more restrictive, it is specified in the table and in the risk description.

Exposure to risk may vary according to duration. The potential impact of these risks may produce effects at very different time horizons, ranging from very short term (less than a year), to medium term (up to a few years) to very long term (up to several decades or more), given the nature of the relevant industrial activities which may span centuries.

In order to control risks, measures have been put in place. Some measures apply to all risks: internal control, commitment approval process (see section 2.1 “Risk management and control of activities”); others are specific to each risk.

Additional provisions for taking into account certain risks related to Corporate Social Responsibility are set out in chapter 3. Cross-references shall, where appropriate, be specified in the risk description.