Risk management
Doing business means taking risks. Looking at FMO's strategy and
activities, it could be said that our primary target is to maximize
development impact and that taking credit and equity risks is
inherent to our core business. In order to do sustainable,
profitable business, however, our challenge is how to take
calculated risks. FMO's Management Board defines the risk profile
and risk appetite, under supervision of the Audit & Risk
Committee and the Supervisory Board. Within our risk appetite, FMO
has a comprehensive, integrated In Control Framework to enable us
to take and control these calculated risks. FMO has limited
risk appetite for other risks than credit and equity
risk.
This In Control Framework plays a pivotal role in the thorough
analysis of risks. FMO has identified risks in the following
categories: strategic, operational, financial/reporting and
compliance risks. Important drivers for our risk universe are FMO's
strategy, objectives and laws and regulations (such as the Dutch
Banking Code, Corporate Governance Code, Financial Supervision Act,
Law against Money Laundering and Financing of Terrorism, Basel II
(in the future Basel III) and International Financial Reporting
Standards).
To mitigate risks we have implemented controls, whose
effectiveness we continuously monitor. Within FMO this monitoring
is conducted by three 'lines of defense'. Business management
reviews processes and reports and performs self-assessments. In the
second line of defense, there are specialized risk departments and
committees. The third line consists of the internal audit function
and external auditors.
We paid special attention to a number of key risks in 2010,
based on the market situation, regulations or internal
circumstances.