pg. 5

"RISK ASSESSMENT AND DUE DILIGENCE

In the last years, the Prada Group placed particular focus on the identification and evaluation of the enterprise risks, as well as on the improvement of a system of procedures aimed at mitigating and managing the risks consistently with Group’s objectives. At the same time, many efforts have been directed toward raising awareness in the purchasing structures of more responsible management of the industrial supply chain.

To this end, in early 2017 the Group adopted a "Qualified Vendor List" procedure to define the responsibilities and operational criteria required to evaluate the ethical, technical and economical reliability of its suppliers. The list is part of the controls needed to initiate and continue with the supply relationship, as set out in the procurement policy, which calls for mitigating risks of non-compliance through additional checks and accountability."

pg. 6

"The inspection plan includes a risk assessment, conducted in the first phase by the various managers, also according to the composition of the industrial supply chain in terms of supply and subcontracting, and any critical issues detected by them or by the functions responsible for the secondlevel controls during the periodic inspections required by the Qualified Vendor List procedure.

The analysis performed during the inspections, which follow a six-month schedule, completes other controls carried out in previous phases and those foreseen by the Qualified Vendor List procedure, thus strengthening the control over the industrial supply chain, ensuring compliance with the Code of Ethics and current regulations.

The results of the inspections are reported to the various managers so that a corrective action plan (Remediation Plan) can be drawn up in the event of breaches or partial breaches of the criteria standards, and corrective actions are identified that the supplier must implement over a period of time that varies according to the irregularity found. In the event of serious breach, or the supplier's inability to ensure a positive outcome in the prescribed time, termination of the supply relationship is evaluated. The team limited its activity to Italy; it began at the end of 2019 and in just a few months it covered most of the manufacturing suppliers in the Leather Goods Division, both first-tier and second-tier suppliers."

The above mentioned quotes refer more to risk identification that look at the compliance of specific suppliers but what we are actually looking for in this question is a step earlier in the risk assessment process. Do they conduct any research/analysis that gives them an indication where risks might be highest in their operations and supply chains? Certain geographies, product groups, types of workforce.. etc.

This quote seems to indicate they have an idea.. particularly that certain geographies are of a higher risk, but they do not provide any information that tells us how they might know that.

"The Prada Group believes that the risk of modern slavery within its organization is non-existent, while it deemed that same risk as overall low along its external industrial supply chain. The geographic location of the suppliers selected by the Group, as well as the profound knowledge of the same in terms of duration and quality of the established partnerships, combined with the systematic control of the quality of the production at the suppliers’ sites, reduces the risk of conditions or pre-conditions such as to constitute circumstances of modern slavery, forced labor and human trafficking" p. 4