CHAPTER 6 Additional content

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The spectrum of risks to which the company is exposed can be classified into four broad categories: strategic risks, financial risks, operational risks and compliance risks.

APPENDIX 2 THE COMPANY'S MAIN RISKS

STRATEGIC RISKS

Related to general contextual factors, positioning and strategic planning, including risks in connection with politics, the economy, technology, etc.

RISKS DESCRIPTION AND CONTROL MEASURES

Macroeconomic risks

At Cepsa we closely monitor global macroeconomic indicators and includes them in our key processes. The company remains committed to the global nature of business and prioritises the ongoing transformation and optimisation of processes and operations in our industrial facilities and services.

Geopolitical risks

As a global company, Cepsa is exposed to geopolitical tensions arising in the regions in which it operates. So we continuously monitor circumstances in these countries by reviewing a number of potential sources of risk, including security, political stability, government effectiveness, the legal and regulatory environment, fiscal policy and macroeconomics, bribery and corruption.

Energy transition and sustainability: regulation and climate change

Cepsa is working to align its strategy and business with regulatory requirements and stakeholder expectations related to climate change and energy transition. Comprehensive monitoring and tracking of recent and ongoing trends and regulations enables Cepsa to stay at the forefront of the transition. This is the case both at the national level in each country and at the European or global level, by monitoring European regulations on sustainability, fuel quality or the promotion of renewable energies, as well as the recent agreements reached at COP 26 (United Nations Climate Change Conference, 2021).

Demand trends and market competition

Cepsa's products and services compete in markets where product differentiation is a major challenge and face fierce competition in all businesses. Changes in the economic environment, the possibility of new COVID-19 scenarios, regulatory pressure or technological developments and efficiency improvements, leading to changes in consumer preferences, are shaping demand for energy. The search for excellence in customer service, permanent monitoring of market trends and continuous improvement as one of the company's core values are some of the levers used by the company to address these risks.

Stakeholders

Cepsa operates in multiple environments in which there are various stakeholders and may be affected by their opinions and actions, which influence our activities. Responsible and transparent relations with our local communities are an essential, core part of our business as we build value for society and contribute to economic, social and environmental development, as well as integrating into the local area and undertaking social projects.