265 Life Is On | Schneider Electric www.se.com Chapter 3 – How we manage risk at Schneider Electric Strategic Report 3. 3.5 Insurance Schneider Electric transfers high severity, low frequency risks to leading insurance companies. The Risk and Insurance department reviews the current pricing and coverage conditions of the external insurance market in implementing the most efficient insurance program. These policies are arranged on a global basis for all Group subsidiaries over which Schneider Electric has operational control. These policies are in all countries where the Group operates and are compliant with local regulations. All insurance companies used by Schneider Electric must meet certain credit and security requirements. All insurance policies have aggregate limits determined based upon loss scenarios and available capacities on the market. However, there is the risk that an extreme claim could exceed the amount of insurance purchased. The insurance policies that are purchased cover varying exposures including, but not limited to: • General liability risks arising from events where the Group is liable for damages to a third party as a result of the activities of its people or its products; • Property damage and business interruption resulting from an insured risk such as fire, flood, or earthquake at a Group site or, to a lesser extent, a customer or supplier location; • Risks associated with the transportation of assets by land, sea, or air; • Damage to equipment being installed at customer locations or construction sites; • Risks arising from data breaches and attacks on IT systems; • Local compulsory policies for employee safety and automobiles; • Liabilities of Executive Directors and Officers; • Environmental risks; • Emergency assistance and repatriation for employees travelling. Insurable risk mitigations The Group identifies and measures the impact of the main insurable risks with a view to reducing or eliminating their impact. • In order to minimize the risks of damage and protect our production capacity, protection standards (including for the sites managed by third parties) are defined, and main industrial sites are audited by an independent loss prevention company with a process to action any recommendations from these audits. • Business continuity plans are implemented, reviewed, and tested, in particular for the Group’s main sites and critical suppliers. These plans are developed to identify internal alternative manufacturing and storage solutions to reduce the disruption to the business. • Crisis management tools are implemented in conjunction with the Group’s Global Security department. These are tested on a systematic basis. Regular exercises are performed to identify areas for improvement. • Hazard and vulnerability studies are carried out to protect our people and our equipment. • For transportation risks, the lessons learned from losses are communicated across the Group to improve the risk management of shipments and the Insurance department liaise closely with Logistic and Planning teams to minimize incident impact. • Employee safety and a safe work environment are priority topics at all site management meetings. Safety training for new employees combined with regular reviews ensure continuous learning and improvement in the recognition and elimination of hazards. Self-insurance As part of the overall insurance strategy the Group self-insures certain risks through two captive insurance and reinsurance companies located in Europe and North America. Examples of the policies reinsured by the Group, include property damage and business interruption, general liability, and transportation. The total amount retained for these risks is capped at EUR 20 million (except for USA and Canada). The cost of the self-insured risks is not considered material at the Group level. The Group assumes a deductible at a site/entity level – though this is not regarded as self-insurance. Cost of insurance programs The cost (including tax) of the Group’s main global insurance programs, excluding premiums paid to captives, totaled around EUR 24 million in 2021.