FERMA will express concern to the European Commission that it is trying to develop more regulations on corporate governance and risk management too quickly.

1. Corporate Governance
& Risk Management -
FERMA to the European
Commission:
“Don’t rush to make
more rules”

2. “On corporate governance and risk management, don’t
rush to make more rules” FERMA to tell Commission
FERMA will express concern to the European Commission that it is
trying to develop more regulations on corporate governance and
risk management too quickly
WHAT SHOULD THE
COMMISSION DO
INSTEAD?
EXAMINE EXISTING ENFORCE THEM,
LAWS TO MAKE SURE RATHER THAN RUSH
THEY ARE TO CREATE NEW
APPROPRIATE LEGISLATION

3. A shift in emphasis
• What are the alternatives?
Increased emphasis on implementation of the
8th Company Law Directive, which is in already
in effect
Focus on appropriate harmonisation of
existing national corporate governance
frameworks

4. FERMA’s response to the Commission’s
green paper on corporate governance
• What is the status?
However, a flavour of
The reply is in its final FERMA’s views emerged
stages for submission at a roundtable held on
later in July the eve of the general
assembly in June

5. Who attended the roundtable?
Marie-Gemma
Dequae
Former FERMA
Chairman
BOARD
MEMBERS
Marc Hertgen
Policy Offices,
Michel Dennery
Corporate
Governance and Deputy Chief Risk
Social Officer , GDF Suez
Responsibility Unit
DG Internal Market

6. Implementing the 8th Directive
Work to implement the 8th Directive, which
deals with internal control, is not yet finished
“We are keen to see the Commission
leave time to do that first before
moving on to the next stage of
regulation”
Michel Dennery
Deputy Chief Risk Officer,
GDF Suez

7. The Commission’s position
• Marc Hertgen, Policy Offices, Corporate Governance and
Social Responsibility Unit DG Internal Market
commented:
The Commission wants to start a longer term, cross-sector
discussion on the evolution of corporate governance once the
immediate emergency of the banking crisis is past
The role of directors in managing risk is a key
aspect of the green paper
“For us, risk management
involves a flow of enough
information for an effective
challenge to executive
management from the board
or shareholders”

8. Disclosure proposals
Risk management is very different from risk
management in industrial and services companies
All sectors must
disclose their financial
risks, and there should “Disclosing strategic risk,
be no question of risk however, is very similar to
taking with safety,
revealing strategy. Companies
security and technical
processes have for a long time made a lot of
effort to communicate their
strategy clearly to stakeholders
and shareholders to get financial
support for their development.
The share price of a company is
Michel Dennery
directly linked to the trust in its
Deputy Chief Risk strategy”
Officer, GDF Suez

9. FERMA’s response to the green paper
• Evolves from its work with the European Confederation
of Institute of Internal Audit Auditing (ACIIA) on the risk
management provisions of the 8th Directive
FERMA has consistently stated that the board of directors
has to approve and take responsibility for the company’s
risk appetite
Directors must make decisions on strategic opportunities
and ensure that systems to manage downside risks within
acceptable limits are effective

10. Future corporate governance for smaller
businesses and unlisted companies
FERMA follows ...although principles
its thinking on of the regulation
Solvency II... apply to all
enterprises
Their application
should be
PROPORTIONATE TO PROPORTIONATE TO
THE SIZE OF THE THE RISK PROFILE OF
BUSINESS THE BUSINESS

11. • The EU consultation paper is available at:
http://ec.europa.eu/internal_market/consultations/2011/corporate
-governance-framework_en.htm
• The joint FERMA-ECIIA Guidance on the 8th Directive is available at:
http://www.ferma.eu/Portals/2/documents/press_releases/201009
21-eciia-ferma-guidance-on-the-8th-eu-company-law-directive.pdf

12. FERMA Risk Management
Forum 2011 www.ferma-forum.eu
Stockholm Waterfront @FERMAFORUM2011
Congress Center
2-5 October 2011 “FERMA Risk Talk”