Universal Music Group N.V. ANNUAL

Market Risk

Financial risk management UMG business activities expose the Group to financial risks, including credit risk, liquidity risk, and market risk. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risks. These risks are inherent to how UMG operates as a multinational with locally operating subsidiaries. To manage these risks, UMG has developed specific policies. The essence of measuring the performance of these policies is to strike a balance between managing risks and contributing to the financial results of UMG. UMG policies are risk-averse in that regard. Enforcement of procedures related to financial risk management is carried out by UMG Group Treasury in line with the guiding principles of the Group Treasury Policies. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by falling to discharge an obligation. UMG's maximum credit risk exposure is equal to the carrying amounts of Trade and other receivables, refer to Note 15, and Cash position and borrowings, refer to Note 17, as presented in the Statement of Financial Position. Also, for the derivatives and assets at fair value via profit and loss, the maximum exposure to credit risk at the end of the reporting period is equal to the carrying amount, refer to Note 19 . The maximum credit risk exposure on guarantees issued corresponds to their nominal amounts, as presented in Note 18 . UMG aims to centralize its cash management with its Tier 1 banks, of which all the banks have credit ratings of minimum of A-. UMG performs ongoing evaluations of the financial and non-financial condition of UMG customers and adjusts credit limits when appropriate. In instances where a customer's creditworthiness is determined not to be sufficient to grant the required credit limit, there are several mitigation tools that can be utilized to close the gap, including reducing payment terms, cash on delivery, prepayments and pledges on assets. Market risk Market risk is the possibility that an entity will experience losses due to factors that affect the financial markets. Market risk includes currency risk and interest rate risk as addressed below, but also risk of change in fair value of the financial instruments, including those traded on the active markets. At December 31, 2024, UMG held financial instrume