Moncler Group | Annual Report 2024 Board of Directors’ Report 72 Moncler Group | Annual Report 2024 Board of Directors’ Report 73

The regular management of its business and the development

of its strategy expose the Moncler Group to various types of

risks that could adversely af fect the Group's operating results

and its f inancial position. These risks are integrated into

the corporate enterprise risk management (ERM) process.

The entity responsible for managing ERM promotes coordination

between the internal functions involved, in order to ensure

consistency and ef fectiveness in overseeing and monitoring

the main risks within the corporate organisation.

The most important business risks are monitored by

the Control, Risks and Sustainability Committee and

periodically examined by the Board of Directors, which

takes them into account in developing the strategy.

Risks related to armed interstate conf licts

Several armed intestate conf licts, among which the conf lict

between Russia and Ukraine and between Israel and Palestine

have major global consequences not only in terms of severe

humanitarian crisis, but also in terms of economic ef fects

on the global markets, ref lected among other things

in increases in lead times and cost of transport, in energy

and raw material costs.

The Group has no suppliers of raw materials nor

manufacturing sites, nor stores located in af fected territories.

However, the escalation of the conf licts could have

unpredictable repercussions on neighbouring countries where

the Group produces, with an impact on production

capacity, e.g. as a result of the temporary disruption in the power

supply, and on procurement times and costs. The situation

is constantly monitored in order to be able to react promptly

to any intensif ication of the conf licts.

Risks associated with the markets

in which the group operates and general

geopolitical and economic conditions

The Group operates in the luxury goods sector, where there is

a signif icant correlation between the demand for goods

and the level of wealth the level of economic growth and political

stability in the countries where demand is generated The Groups

ability to develop its business also depends on the political

stability and economic situation of the various countries in which

it operates

Although Moncler operates in a signif icant number of countries

around the world reducing the risk of a high concentration

of the business in limited geographical areas any deterioration

in economic social or political conditions in one or more markets in

which it operates could have negative consequences for sales

and economic and f inancial results

The possible introduction by national or supranational entities

of constraints on the movement of individuals as a result

for example, of international crises or pandemics —, terrorist

attacks, as well as the tensions in Asia-Pacif ic area and

the introduction of new duties or any export limitations as a result

of trade or f inancial sanctions, could also af fect sales, particularly

in relation to specif ic geographical areas. In particular, in recent

years the importance of Asian markets for the luxury goods

sector has increased, reaching around half of turnover for the

Moncler brand at the end of 2024, whereas Stone Island, having

only recently begun its international expansion, particularly

in Asia and America, remains more exposed to the European

market (67% of revenues in f iscal year 2024).

Cyber risks and personal data protection risks

The rapid technological evolution and growing organisational

complexity of the Group, together with the increasing

sophistication and frequency of cyber attacks, do not exclude

the potential risk to the Group of cyber attacks through

the use of innovative attack techniques.

Moncler is investing signif icantly in its model for

managing cyber risks with a view to business continuity

and

data protection, adopting the best technologies and

methodologies for vulnerability identif ication and system

protection, ensuring the presence of qualif ied cyber security

expertise, staf f training and a careful process of periodic risk

assessment and review. For more information, please refer

to Section Three — Consolidated Sustainability Reporting.

Risks related to the cost and availability

of high quality raw materials, supply chain control

and supplier relations

Moncler and Stone Island brand products require high-quality

raw materials, including, but not limited to, down, nylon, cotton

and wool. The price and availability of raw materials depend

on a wide variety of factors, which are largely beyond the Group's

control and dif f icult to predict.

Although the Group has always managed to ensure a supply

of raw materials adequate to its production requirements

in terms of quantity and quality hypothetical further tensions

on the supply side could lead to dif f iculties in supply and a further

increase in costs with negative consequences for the Groups

economic results In order to minimise the risks associated with

the potential unavailability of raw materials in the timescales

required for production Moncler adopts a multisourcing strategy

for supplier diversif ication and plans purchases with

a mediumterm time horizon In addition suppliers of raw

materials must meet precise contractual quality composition

and performance requirements and comply with

applicable

laws on worker protection working conditions local labour

laws respect for animal welfare the environment and the use

of hazardous chemicals

Main risks

In the area of workers' rights, the Moncler Group includes,

among its supplier qualif ication criteria, company audits carried

out by qualif ied professionals. For more information, please refer

to Section Three — Consolidated Sustainability Reporting.

Risks related to brand image,

reputation and recognition

The luxury goods sector is inf luenced by changing consumer

tastes, preferences and lifestyles in the various regions in which

it operates. The Moncler Group's success is signif icantly

inf luenced by the image, reputation and recognition of its brands.

If in the future the Group is not able, through its products

and initiatives, to maintain the image, reputation and recognition

of its brands, sales and economic results may be af fected.

The Group therefore constantly strives to maintain

and increase the strength of the Moncler and Stone Island brands,

with a focus on product quality, innovation, communication

and the development of its distribution model according

to criteria of selectivity, quality and sustainability, including

when it comes to the selection of counterparties with which

to operate. The Group integrates sustainability assessments,

including those related to compliance with local values (religious,

cultural and social) into its communication and marketing

strategies, out of a belief that the continuous creation of value

for all its stakeholders is a fundamental priority in strengthening

its reputation.

Risks related to relations with

third-party producers

The Moncler Group directly manages the development of its

collections as well as the purchase or selection of raw materials,

whereas for the garment manufacturing phase it relies on

both own factories and independent third parties that operate

under the Group's close supervision (façon manufacturers).

Although the Group does not depend to a signif icant extent

on any façon manufacturer, the suspension or termination

of a relationship with some of the most signif icant façon

manufacturers could adversely af fect the Groups business with

consequences for its sales and earnings

The Moncler Group constantly monitors the supply chain

of thirdparty manufacturers in order to ensure in addition

to requirements of high quality and f inancial reliability full

compliance with labour laws worker safety and the environment

and the principles of its Supplier Code of Ethics and Conduct

through audits at third party contractors and their subsuppliers

Risks associated with the retail

distribution network

With the Moncler brand, the Moncler Group generates most

of its revenues through the retail channel, consisting of directly

operated single-brand stores (DOSs) and the online store,

whereas the Stone Island brand has progressively reduced its

exposure to the wholesale channel and it now has a balanced

exposure between the two channels. Over the years, the Group

has demonstrated its ability to open new stores in the most

prestigious locations in major world cities and in top-tier

department stores, despite the competition between operators

in the luxury goods sector to secure such positions, which

is very strong.

In addition, by its nature, the retail business has a higher

incidence of f ixed costs, mainly relating to lease agreements.

Although management has demonstrated its ability to develop

prof itable retail business over the years, a potential slowdown

in sales in specif ic geographical areas could reduce the Group's

ability to turn a prof it.

Environmental risks

For more information, please refer to Section Three —

Consolidated Sustainability Reporting.

Impact of climate change issues on the Group's

consolidated balance sheet

For more information, please refer to Section Three —

Consolidated Sustainability Reporting.

Risks associated with dependence

on key personnel

For more information, please refer to Section Three —

Consolidated Sustainability Reporting.

Risks related to the counterfeiting

of brands and products and the protection

of intellectual property rights

The luxury goods market is characterised by the counterfeiting

of brands and products

The Moncler Group has made signif icant investments in

the adoption of innovative technologies that enable tracking

of products throughout the value chain to prevent and mitigate

the ef fects of counterfeiting of its brands and products and to

protect its intellectual property rights in the territories where

it operates However the presence on the market of signif icant

quantities of counterfeit products could still adversely af fect

the brand image with a negative impact on sales and

f inancial performance