FERMA to respond to european proposals on boards and risk management

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  • 1. FERMA:“To respond toEuropean proposalson boards and riskmanagement”
  • 2. Corporate Governance & Risk management RISK MANAGEMENT Marie- Gemma Dequae KEY ELEMENT OF EUROPEAN Are preparing a BOARD COMMISSION’S MEMBERS response for LATEST DISCUSSION FERMA PAPER ON CORPORATE GOVERNANCE Michel Dennery
  • 3. What will be the result of this consultation? CONSULTATION Although no legislative initiatives are yet scheduled to follow THE COMMISSION IS LOOKING TOWARD A FURTHER REVISION OF THE COMPANY LAW DIRECTIVE, NOW IN ITS EIGHTH YEAR
  • 4. The consultation paper WHAT ARE THE KEY ELEMENTS?
  • 5. The role of directors in managing risk• Business today need high-performing, effective boards to challenge executive management “The role of chairman of the board is particularly important, as are the board’s responsibilities for risk management” THE COMMISSION
  • 6. The role of companies and boards in riskmanagement• Section 1.5 of the paper is devoted entirely to risk management and makes the following points: Companies should develop an adequate risk culture specific to the organisation The board should bear primary responsibility for defining the risk profile and adequate monitoring of compliance with their strategy
  • 7. The role of companies and boards in riskmanagement• It would be difficult to propose a single risk management model for all companies PARTIES INVOLVED IN RISK MANAGEMENT CLEARLY DEFINE ROLES RESPONSIBILITIES
  • 8. FERMA will consider its response to twoquestions in the document Should the board approve and take responsibility for the company’s “risk appetite” and report it meaningfully to shareholders? Should these disclosure arrangements also include relevant key societal risks? Should the board ensure that the company’s risk management arrangements are effective and commensurate with the company’s risk profile?
  • 9. How FERMA will approach these questions “FERMA will answer in a way that balances two kinds of interests. On one hand, risk appetite, risk taking and risk culture must serve the development of companies and the economy. On the other hand, risk management must serve business’ responsibilities, including their enterprise social responsibilities” MICHEL DENNERY
  • 10. Welcoming your comments• Dennery and Dequae welcome comments from other FERMA members• Please submit comments in good time before the consultation deadline of 22 July 2011• The consultation paper is available at: • http://ec.europa.eu/internal_market/consultations/2011/c orporate-governance-framework_en.htm
  • 11. FERMA Risk Management www.ferma-forum.eu Forum 2011 @FERMAFORUM2011 Stockholm Waterfront Congress Center “FERMA Risk Talk” 2-5 October 2011