General Risk Control and Management Policy

The Board of Directors of Lanzo Construction Company (“LANZO” or the “Company”) oversees the management of LANZO and its business with a view to enhance the long-term value of LANZO for its shareholders. The Board of Directors of LANZO (the “Board of Directors”) has adopted this General Risk Control and Management Policy (the “Policy”) to assist in exercising its responsibilities to LANZO and its shareholders.

Purpose

Purpose

The purpose of this Policy is to establish the basic principles and general framework for the control and management of all kinds of risks facing the Company and the LANZO Group, and which must be applied in accordance with the mission, vision and values of the LANZO Group approved by the LANZO Board of Directors. This Policy is further developed and supplemented by the Corporate Risk Policies and the Specific Risk Policies that may be established for certain businesses and/or companies within the LANZO Group. The heads of Lanzo’s divisions must approve within their corresponding management decision-making, the specific risk limits applicable to each of them and implement the control systems required to ensure compliance therewith.

Scope

This Policy applies to all companies and divisions that make up the LANZO Group. Excluded from the scope of this policy are listed subsidiaries, if any, which have their own Corporate Policies approved by their competent bodies. At those companies in which LANZO has an interest and to which this Policy does not apply, LANZO shall promote principles, guidelines, and risk limits consistent with those established in the Policy and in its supplemental Risk Policies and shall maintain appropriate channels of information to ensure a proper understanding of risks.

Risk Factors--Definitions

From a general viewpoint, a risk is considered to be any threat that an event, action, or omission may prevent the LANZO Group from reaching its objectives and successfully carrying out its strategies.

The risk factors to which the LANZO Group is subjec generally are listed below:

a) Corporate Governance Risks:

• LANZO accepts the need to achieve the fulfilment of the corporate interest and the sustained maximization of the economic value of LANZO and its long-term success, in accordance with the LANZO Group’s corporate interest, culture, and corporate vision, taking into account the legitimate public and private interests that converge in the conduct of all business activities, particularly those of the various General Risk Control Management Policy. A fundamental requirement for the foregoing is compliance with the LANZO’s Corporate Governance System, which is inspired by the good governance recommendations generally recognized in international markets and consists of LANZO’s By-Laws, Corporate Policies, the Internal Corporate Governance Rules, and the Other Internal Codes and Procedures approved by the competent decision-making bodies of the Company.

b) Market Risks:

• Defined as the exposure of the LANZO Group’s results and net worth to changes in market prices and variables, such as exchange rates, interest rates, commodity prices (electricity, gas, CO2 emission allowances, other fuel, etc.), prices of financial assets, and others.

c) Credit Risks:

• Defined as the possibility that a counterparty fails to perform its contractual obligations, thus causing an economic or financial loss to the LANZO Group. Counterparties can be end customers, counterparties in financial or energy markets, partners, suppliers, or contractors.

Business Risks:

• Defined as the uncertainty regarding the performance of key variables inherent in the business, such as the characteristics of demand, weather conditions, and the strategies of different stakeholders.

e) Regulatory Risks:

• Defined as those arising from regulatory changes made by the various regulators, such as changes in compensation of regulated activities or in the required conditions of supply, or in environmental or tax regulations.

f) Operational, Technological, Environmental, and Social Risks:

• Defined as those related to direct or indirect economic losses resulting from external events, inadequate internal procedures, technical failures, human error and/or fraud, including the risk related to climate change, information technology, cybersecurity and technological obsolescence.

g) Reputational Risks:

• Includes the potential public negative impact on the company value and brand of LANZO and its subsidiaries resulting from internal or external factors that degrade expectations created among various stakeholders. This includes the potential loss in revenue, brand degradation and/or the destruction of shareholder value by operational, environmental, cyber, regulatory or other factors associated with potential reputational damage.

Basic Principles

The LANZO Construction Company is subject to various risks inherent in the different industries and markets in which it does business, and in the activities, it carries out, which may prevent it from achieving its objectives and successfully implementing its strategies.

Aware of the significance of this issue, the Board of Directors will develop all of its capabilities in order to adequately identify, measure, manage and control significant corporate risks to all the activities and businesses of the LANZO Group. It will establish, through this Policy, the mechanisms and basic principles for appropriate management of the risk/opportunity ratio, at a risk level that makes it possible to:

• a) attain the strategic objectives formulated by the LANZO Construction Company with controlled volatillity;


• b) provide the maximum level of assurance to the shareholders;


• c) protect the results and reputation of the LANZO Group;


• d) defend the interests of customers, employees, shareholders, other groups interested in the progress of LANZO, and society in general; and


• e) ensure corporate stability and financial strength in a sustained fashion over time.

In the implementation of the aforementioned commitment, the Board of Directors has the cooperation of the Audit and Compliance officers, which, as a consultative body, monitors and reports upon the appropriateness of the system for assessment and internal control of significant risks, acting in coordination with the audit and compliance officers existing at the LANZO Group.

All actions aimed at controlling and mitigating risks shall conform to the following basic principles:

• a) Integrate the risk/opportunity vision into LANZO’s management, through a definition of the strategy and the risk appetite and the incorporation of this variable into strategic and operating decisions.


• b) Segregate functions, at the operating level, between risk-taking areas and areas responsible for the analysis, control, and monitoring of such risks, ensuring an appropriate level of independence.


• c) Guarantee the proper use of risk-hedging instruments and the maintenance of records thereof as required by applicable law.


• d) Inform regulatory agencies and the principal external players, in a transparent fashion, regarding the risks facing the LANZO Group and the operation of the systems developed to monitor such risks, maintaining suitable channels that favor communication.


• e) Ensure appropriate compliance with the corporate governance rules established by the LANZO through its Corporate Governance System. Update and continuously improve this system within the framework of the best international practices regarding transparency and good governance and implement the monitoring and measurement thereof.


• f) Act at all times in compliance with the law and LANZO’s Corporate Governance System and, specifically, in accordance with the values and standards reflected in the Code of Business Conduct and Ethics and under the principle of “zero tolerance” for the commission of unlawful acts and situations of fraud set forth in the Crime

Risk Policies and Limits

This Policy is further developed and supplemented by the Corporate Risk Policies and the Specific Risk Policies established in connection with certain businesses of the LANZO Group, which are listed below and are also subject to approval by the Board of Directors.

The following policies will be developed/modified and upgraded on a regular basis. Corporate Risk Policies:

• Corporate Credit Risk Policy
• Corporate Market Risk Policy
• Operational Market Transaction Risk Policy
• Operational Insurance Risk Policy
• Investment Risk Policy
• Financing and Financial Risk Policy
• Reputational Risk Policy
• Informaiton Technology Risk Policy
• Cybersecurity Risk Policy
• Purchasing Risk Policy