RISK FACTORS AND INTERNAL CONTROL financial situation or results of operations of the Management of risk Rexel Group. The Rexel Group may also be required The impact of such a risk is limited given the Rexel to make unforeseen expenditures or may experience Group’s logistical organization. It is organized at temporary or extended disruptions with respect to the local level, as opposed to the international level, its personnel, operations or information processing. and similar processes supported by warehouse Management of risk management systems are shared across several countries. Should a malfunction occur in a Rexel is highly focused on the protection, distribution center, the disruptions may be limited confidentiality, integrity and maintenance of the through the use of another distribution center or operational capacity of its information systems. through inter-branch transfers. Rexel is continually adapting its strategy by delivering Various service qual ity indicators and logistical IT services to address the necessary risks. The platform security data are shared within countries 2 implementation of hybrid computing environments and within the Rexel Group. This information is along with ongoing investments in technologies regularly monitored to alert Rexel of problems to detect and mitigate vulnerabilities and attacks and implement potential corrective action if is strengthening Rexel’s cybersecurity posture, necessary. particularly around threats such as disruptive attacks and potential data breaches for both its internal and externally facing applications. 2.1.1.6 Risks relating to supplier dependence Internal control procedures prescribe a periodic Risk validation of disaster recovery plans and incident While rationalizing its purchasing policy, the Rexel response procedures. In addition, compliance with Group is reducing the number of its suppliers in rules related to change management, planning and order to strengthen its relationships with a smal ler execution of complex projects as wel l as access number of manufacturers.In 2017, the Rexel rights management and control is regularly audited. Group’s purchases from its 25 leading suppl iers Rexel frequently assesses the level of protection of accounted for circa 51% of its total purchases. its critical systems and has defined an organization, About 77% of its total purchases were from its governance principles and technologies required 200 leading suppliers. to increase their protection against intrusion and hacking attempts. As new practices emerge around In certain geographical regions, some entities of the mobi l ity at work, Rexel reinforces its practices Rexel Group may be dependent on certain suppliers. regarding data management and protection on In the event such a supplier reduces its product computing devices available to its employees. offering or in case of default or non-compliance of one or more such suppliers which would interrupt Despite a constant investment in protection business relationships, the Rexel Group cannot measures, residual risks may exist. The Rexel Group guarantee that it will be able to offer a satisfactory re-evaluate its safety plan on a regular basis in order alternative to its customers, as a result of which to reduce them as much as possible. they may turn to one or more competitors to obtain products. 2.1.1.5 Risks relating to the Rexel Group’s logistical structure The occurrence of any of these events may have an adverse effect on the Rexel Group’s financial Risk condition or results of operations. The evolution of the Rexel Group’s logistical Management of risk structures or malfunction of one or several of such structures may result in temporary or long-lasting In general, the Rexel Group’s distribution business disruptions of its business. In addition, projects such involves entering into short and medium-term as the implementation of new distribution centers, agreements with suppliers from which terms and designed to improve the efficiency of the supply conditions are subject to periodic re-negotiations. chain and better serve customers, may face delays The relative importance of the Rexel Group to its or difficulties. This could have a negative impact on main suppl iers l imits the risks of termination of its reputation and results of operations. contracts or material change in the product offers. REXEL 2017 – REGISTRATION DOCUMENT 39