Governance – what are suitable governance models for associations in the 21st century and how do they fit into the current legal/administrative framework in Europe?

1. Governance – what are suitable governance models for
associations in the 21st century and how do they fit into
the current legal/administrative framework in Europe?
Dr Marie Gemma Dequae
ESAE Peer to Peer session, Brussels
13th March 2014

2. agenda
Basic principles of corporate governance
Own experience in NFP’s
Corporate
governance
Owners/shar
e-holders/
members
Boards Specialised
committees
Executive
committee

3. = a set of rules and behaviours which determine how
organisations are managed and controlled (e.g. Code 2009,
Code Buysse, …)
Corporate
governance
Owners /
Shareholders/
members
Boards
executive
management
specialised
committees
Leadership,
entrepreneurship &
performance
Control & conformity
Clear separation
between:
Governance
and
Management
=
responsibility
of the Board

4. 1992
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
COSO report (US)
DEY report (Can.)
COCO report (Can.)
CAN / CSA Q850
Rapport Vienot (F)
Peters report (NL)
UK Combined Code,
Turnbull
KonTraG (Germany)
Groupe travail
AFEP, MEDEF (F)
US Blue Ribbon
Comm.
US Sarbanes-
Oxley Act (US)
Comm. Tabaksblat
(NL)
Code Lippens & Buysse
(B)
2012
Code 2009 (B)
Loi de Sécurité Financière
(F)
For update
corp.governance
regulations see
www.ecgi.org
Codes van deugdzaam ondernemen en standaarden

5. The organisation shall:
1. adopt a clear governance structure
2. have an effective and efficient board that takes decisions in
the organisation’s interest
3. have a rigorous and transparent procedure for the
appointment and evaluation of the board and its members
4. define a clear executive management structure
5. remunerate directors & executive managers fairly and
responsibly
6. enter in dialogue with owners/shareholders/members
based on a mutual understanding of objectives/mission and
concerns
7. ensure adequate disclosure of its corporate governance
Corporate
governance
Owners /
Shareholders/
members
boards
executive
management
specialised
committees
Basic principles

6. 8. All directors shall demonstrate integrity and commitment
9. The board shall set up specialised committees
STAKEHOLDERS
Corporate
governance
Owners /
Shareholders/
members
boards
executive
management
specialised
committees
Shareholders/
members
ManagementBoard of Directors
Basic principles

7. Communication with shareholders to be organised:
promote an effective dialogue with them
 good contacts between members (shareholders) and board are
important
General shareholders’ (or members’) Assembly to be organised:
• Frequency?
• Information provided?
• Compulsory
• Free
Corporate
governance
Owners /
Shareholders/
members
boards
executive
management
specialised
committees

8. Build corporate governance charter (CG charter);
Duties of the Board (oversight):
• governing the organization by establishing broad policies and objectives;
• approving and reviewing realisation of the organisation’s strategy
• monitoring and reviewing the effectiveness of the board’s committees
• selecting, appointing, supporting and reviewing the performance of the chief
executive;
• ensuring the availability of adequate financial resources;
• approving annual budgets and follow up of financial statements;
• approving and monitoring framework of internal control and risk
management
• accounting to the stakeholders for the organization's performance;
• setting the salaries and compensation of company management.
Corporate
governance
Owners /
Shareholders/
members
boards
executive
management
specialised
committees
Defend & Satisfy the Corporate Interest

9. Board members:
• Integrity and commitment
• Transparant nomination procedure
• Professional development
• Evaluation (under lead of chairman)
Max 12 years board member: 3à4 years and 2 times
renewed
Harmonious composition of board:
Diversity amongst board members: gender, competences, nationality,
sector, …
Corporate
governance
Owners /
Shareholders/
members
Boards
executive
management
specialised
committees

10. Corporate
governance
Owners /
Shareholders/
members
Boards
executive
management
specialised
committees
One-tier structure Two-tier structure
General AssemblyGeneral Assembly
BOARD
SUPERVISORY
BOARD
EXECUTIVE SENIOR
MANAGEMENT TEAM
EXECUTIVE
COMMITTEE
Non executiveexecutive

11. Corporate
governance
Owners /
Shareholders/
members
Boards
executive
management
specialised
committees

12. Corporate
governance
Owners /
Shareholders/
members
boards
executive
management
specialised
committees
Be entrepreneurial and drive
forward the business
Exercise prudent control
Sufficiently knowledgeable to be
answerable for its actions
Able to stand and retain an
objective and holistic view
Sensitive to the pressure of short
term issues
Responsive to broader longer-term
trends
Understand local issues Be aware of international
competitive and other influences –
both potential and actual
Focussed on the commercial needs
of its business
Act responsibly towards its
employees, business partners and
society
ComplexroleoftheBoard

13. Corporate
governance
Owners /
Shareholders/
members
boards
executive
management
specialised
committees
Strategic direction Ability to contribute to vision,
mission, values and purpose;
effective resources (people &
financial)
Business judgement Ability to weigh evidence and
analyse ideas & options
Relationships Ability to build team cohesivenesss
within board and executive
colleagues whilst giving constructive
challenge
Governance Ensure the organisation is managed
with integrity and probity
BoardCompetencies

14. Corporate
governance
Owners /
Shareholders/
members
boards
executive
management
specialised
committees
Makes strategic decisions rather than
operational & management decisions
Works with the executive staff to ensure
that the decisions of the Board are acted
upon
Delegates to sub committees, but doesn’t
abdicate
makingtherightdecisions:
aSTRONGBOARD

15. The board can set up specialised committees which will
provide advices to the board for approval by all
board members.
Most important committees are:
• audit committee (only NED) & risk committee
• nomination & remuneration committee
• strategy committee
• finance committee
• …
• At least 3 members per committee and
• external professional advice can be interesting
Corporate
governance
Owners /
Shareholders/
members
boards
executive
management
specialised
committees

16. Board appoints the CEO, indicating executive management’s
responsibilities, duties, powers, composition and operation
(in CG charter)
 Nomination committee assists the board.
Duties of executive management:
The executive management should at least:
- be entrusted with the running of the organisation;
- put internal controls in place (i.e. systems to identify, assess, manage and
monitor financial and other risks) without prejudice to the board's
monitoring role, based on the framework approved by the board;
- present to the board a complete, timely, reliable and accurate
preparation of the company's financial statements, in
accordance with the applicable accounting standards and policies of the
company;
Corporate
governance
Owners /
Shareholders/
members
boards
executive
management
specialised
committees

17. - prepare the company's required disclosure of the financial
statements and other material financial and non-financial
information;
- present the board with a balanced and understandable
assessment of the company's financial situation;
- provide the board in due time with all information necessary
for the board to carry out its duties;
- be responsible and accountable to the board for the discharge
of its responsibilities.
Corporate
governance
Owners /
Shareholders/
members
boards
executive
management
specialised
committees

18. My experience in NFP:
• BELRIM: president 1994-2005
• FERMA: president 2005-2009
Many thanks for your attention!
Questions?
Mariegemma.dequae@gmail.com

19. ‘Governance – what are suitable governance
models for associations in the 21st century and
how do they fit into the current
legal/administrative framework in Europe?”
Florence Bindelle ,Executive Director, FERMA
ESAE Peer to Peer session, 13th March 2014

20. Opening remarks
• Evolution from private sector, to the public sector and recently not for
profit where words « transparency », « performence », « responsibility »
are more and more used
• Can we transfer the governance models of companies centered on the
creation of economic value to the associations? What about management
tools? Is performance also transferrable?
• Companies evolve towards « social responsibility » whist association
evolution towards reinforcing « governance models » and « management
tools »
• There is a main differenciation on the focus which is not the internal
activity but the values and objectives that need to be adapted to fit in the
managerial analysis scope and therefore the concept of performance be
linked to the accomplishement of the mission
• What are the limits? The risks?
• Could associations have their own model of organisation?

21. Agenda
1. What is FERMA?
2. How is « association » governance applied?
3. What is the challenge?

22. Part 1:
What is FERMA?

23. Some facts and figures…
• National Associations of Insurance
and Risk Management appeared in
Europe in the early 70’s
• In 1974, six of them decided to create
a European Federation called AEAI
• In 1986, AEAI became FERMA with 10
associations
• Today FERMA gathers 22 Associations
in 20 countries and is still growing
– Representing over 4500 risk and
insurance managers
– Cross Sectors (80% Private and 20%
Public)
Countries (20) Members (22)
Belgium BELRIM
Czech Republic ASPAR CZ
Denmark DARIM
Finland FinnRima
France AMRAE
Germany BfV & DVS
Italy ANRA
Luxembourg ALRIM
Malta MARM
Norway NORIMA
The Netherlands NARIM
Poland POLRISK
Portugal APOGERIS
Russia RUSRISK
Slovenia SI.RISK
Spain AGERS & IGREA
Sweden SWERMA
Switzerland SIRM
Turkey ERMA
UK AIRMIC

24. Our Mission & Objectives
The Federation of European Risk Management Associations (FERMA) exists to lead and enhance
the effective practice of risk management, risk financing and insurance.
1. To be a significant stakeholder in the decision making process at the European level on Risk
Management , Insurance and Risk financing issues
Strategic actions:
 To monitor new regulations and standards
 To detect early issues that can impact our profession
 To propose and co-ordinate positions with member associations on relevant issues
 To issue guidance and position papers
 To maintain interest representation with the European institutions
 To establish technical alliances and ad hoc coalitions with other stakeholders
2. To coordinate, promote and support the development and use of risk management, insurance
and risk financing in Europe
Strategic actions:
 To set and promote professional practices and standards
 To organize conference, seminars, forums
 To maintain a two way communication with national associations on development and application of
risk management
 To set up surveys and benchmarks to identify and share current practices
 To facilitate the development of new associations in European countries

25. Structure & Governance
Structure
General Assembly
• Meets once a year, in June in Brussels
• One representative of each association
member
Board of Directors
• Risk and Insurance Managers only
• Composed of minimum 7 members and
maximum 12 members,
• Elected for a 3 years period by the General
Assembly
Executive Board
• President, Vice Presidents, Executive Director,
General Secretary , Treasurer
Management team
• Executive Director, Project Coordinator,
Project & Administrative Assistant, European
affairs, Press Coordinator, Webmaster
Governance
Bylaws
• Articles of the statutes
• Under Belgian Law, non-profit association
Governance and Administrative
procedure
• Internal rules and governance of the
association
Board meetings
• One hour conference call per month
• 3 face-to-face meetings a year
Presidents meetings
• One hour conference call per month
• President summit in October
Finance
• 20% membership fee and 80% self financed

26. What is the value for our members ?
• Promoter
• Advocate
• Network
• Catalyst
• Advisor
• Knowledge center
• European Presence

27. Part 2:
How is « Association » Governance
applied?

29. Implementing Governance
« Governance is the process by which decisions are made and implemented »
Today
•By laws (light) are reviewed
every 5 years
•Governance and
administrative procedure
(inclusive and simple) is
reviewed every year
•These documents govern the
role and power of the
governing bodies and the
decision making processes of
the Federation.
2008
•After a long process, role of
General Assembly and Board
were distinguished and
number of Board members
reduced (22 to 7-12)
•Need to redefine the role of
the Board « identity and
role »: an administrative
procedure including the
commandments was
adopted
•Move from a non active
board to an active board
•Shift from a national minded
representative to a european
minded representative
•It worked!
1999
•FERMA opened an office in
Brussels
•Board and General assembly
meetings were two separate
meetings with the same
attendees and same topics
discussed leading to a
confusion of roles and
responsibilities
•From 1999 to 2008 FERMA
Board/General Assembly
increased from 9 to 22
•Need for a more manageable
size and structure
representing carrying
FERMA/ European voice
rather than a national voice
1974
• In 1974, FERMA was
created
•9 members
• One general assembly and 2
board meetings a year
•No permanent office
•Governed by by-laws only

30. By-Laws
1. Membership
 Membership categories
 Membership fees
 Admission of new members
 Members governance
2. General Assemblies
 Composition, voting rights, powers
 Functioning (when and who?)
 Voting rights
 Amendments to by-laws
 Association register
Members Board Committees
Executive
Management
Governance and administration
procedure
1. GA : Organisation and attendance
 Location
 Observers
 Nb of Proxies & template
2. Votes
 Counting
 Secret or not
 Renunciation
 Several members in one country
The General Assembly appoves the accounts, reviews the strategy and discharges the
Board of Directors.

31. By-Laws
1. Composition & Functioning
 Nb of members 7 to 12
 Duration of Mandate/Term period
 Remuneration: free of charge
 Revocability by GA
 Independance : Represent the interest of FERMA
 Voting rights and pesence quorums
2. Responsibilities
 Elects the President, VP, SG, Treasurer
 Term Two years renewable once
 Settle interpretation of articles
 Delegation of powers and binding deeds
 Role of SG and Treasurer
 Appoint the Audit and Finance Committee
Members Board Committees
Executive
Management
Governance and administration procedure
1. Election of board members
 Requirements to apply
 Decision making process to be elected
 Rules if the member no longer meets the
requirements
 Serve FERMA’s intererest
 Board meetings attendance, frequence,
quorums for decision making
2. Responsibilities
 One or more tasks
 Performance assessed by the president
 Executive committee
 Handover of presidency
The Board of directors defines the strategy by setting the objectives, empowers the
executive management, sets up and leads committees, admits new members, defines the
financial procedure.

32. Members Board Committees
Executive
Management
Committees (Audit and finance & Working) are appointed by the board to support
its strategy and action plan.
The audit and finance committee
• Established by the by-laws within the Board &
defined in the Governance procedure
• By –laws: Supervision of the accounting
procedures, cash management and investment
policy of the FERMA funds
• Reports to the Board twice a year
• Governance procedure : financial matters such
as bank payments, credit cards, bookkeeping,
external auditor, budget, financial investments,
travel and reimbursement policy, expense
reimbursement procedure
Working committees
• Task force working on industry issues
• Assigned to a board member by the governance
procedure and executed by the executive staff
including senior advisors
• Committees represent, involve, and serve the
federation ‘s interest and its members, and are
an effective work force to support the effective
implementation of the strategic actions

33. Executive Director presents the outcome as FERMA is based on the model of a 2 tier structure.
The supervisory board listen to the results and takes a decision.
The Board acts on the strategy and is not in the dailymanagement to concentrate on real topics.
The Executive director
Supports the Board to present the strategy and monitors the evolution.
The executive staff implements the decisions.
The president of the board reports monthly the progress to the members.
The Executive Committee
Established by the By- Laws & defined in the Governance procedure.
Composed by the President, Vice presidents, Secretary General, Treasurer, Executive Director
Prepares the strategic plan, monitors its evolution and aligns actions with the budget
Members Board Committees
Executive
Management
The Executive Management implements the strategy, monitors of the actions and
reports progress to the Board.

34.  The governance procedure governs the legal and administrative matters:
 Authority for contracts signature
 procurement rules
 the organisation of conference calls
 press releases procedure& approval of positions papers
 participation of board members to outside conferences
 non compliance with by-laws
 The annexes of the governance procedure include:
 the proxy template
 the application template
 the comandments
 The renunciation template
 the expense report template
 the distribution list
Members Board Committees
Executive
Management
The Executive Management implements the strategy, monitors of the actions and
reports progress to the Board.

35. Part 3:
What is the challenge?

36. Conclusion
• Governance should be constantly adapted to the life of the
association (not too rigid – board members are busy)
• Governance should establish the working environment with a
framework and processes in place which are clear, known and
recognized by all (members, staff, board)
• Governance should be compliant with the culture and the
regulation of the country
• Governance is about managing the risks of the organisation
• Governance is a tool to move the organisation forward in a timely
manner and to implement decisions taken

37. A few points of discussion…
• Are structures and processes defined and clear for Members, Board members and Staff?
• Are members engaged in the decision making process?
• Are risks properly evaluated?
• Do we know our risk and opportunities?
• Are mandates / role and responsibilities clearly defined?
• Is there a financial plan?
• Are the reserves sufficient?
• Are major expenses in line?
• How do we compare with our peers?
• Have we paid our taxes?
• Are we insured appropriately?
• Do we have appropriate accounting policies and procedure?

38. Thank you for your attention !
Questions?
FERMA
Phone: +32 2 761 94 32
Email: florence.bindelle@ferma.eu
www.ferma.eu