Le magazine du trésorier - n°66 - 2ème trimestre 2009 - (Page 38)

NEWS WHO WILL “RATE” RATING AGENCIES? That is the key question often raised and (so far) never answered. European Commissioner, Charlie McGreevy, in charge for Internal Market DG, backed by a majority of Members of the European Parliament’s economic and monetary affairs committee voted in favour of a proposal on rating agencies control. cies will be for sure reinforced to better protect investors. FM. ENTERPRISE RISK MANAGEMENT (ERM) NEXT STEPS TO CONSIDER Benefits of implementing an ERM process are vast. In a broad sense, they include organizational sustainability and, possibly, a strategic advantage. It also includes more granularity in understanding corporate goals and objectives in terms of risks taking, enhanced talent management, mitigation of expenses and losses and overall an improved corporate stewardship and stakeholder value. Unfortunately, ERM may still be seen as the route to helping corporates demonstrate compliance with governance and reporting requirements. Benefits of a good ERM program accrue as it matures and as it is embedded in key strategic business division process. There is no single standard approach to designing an effective ERM process. Each ERM program must be aligned to group strategy and organisation’s culture.When the risk culture is there, it can help shaping the business in positive ways and it has greater chance of success. The communication and active engagement of internal and external sta- keholders is vital to facilitate changes and to embed ERM in key business processes throughout the company. Usually when implementing ERM, risk mangers focus on top management and forget to reach out to employees, who are owners of money risks within the organisation. ERM should also be shaped to support business changes and to deliver organisational sustainability. Rarely a company having ERM implemented could pretend using it to full capacity. There are three key elements in a successful ERM lifespan which are Strategy Resources Culture G G G The idea is to pre-register credit rating agencies in the EUR and to get them scrutinized by regulators to check how compliant they are with governance rules. The MEPs went event further requiring agencies to be registered to the CESR (Committee of European Securities Regulators) which is a sort of supra national financial market regulators in Europe. As for auditors, the new idea is to require a compulsory rotation every five years of all analysts to prevent conflicts of interest and to get a fresh eye on rating from time to time. We all know how much criticized the three major agencies were during the crisis for having underestimated risks related to complex products and for having been paid and therefore possibly caught at the games of incentives by issuers to underplay underlying risks, driving to the disaster we saw. The over weighted fee structure generated by these (toxic) sophisticated products was not really same. Yet, lots of people keep defending a model were issuers are not payers for rating agency fees, to avoid promise and to have a more independent organisation. Whatever will be voted by MEPs, the control on agen- A successful ERM should be fully integrated and embedded in the business processes can even help improving internal relationship among managers. With a well-defined performance measurements (KRI : Key Risk Indicators) to monitor progress and with an effective, as well as consistent, communication strategy, Chief Risk Officers (CRO) can engender collaboration across Business Units (Bus). ERM is a permanent and on-going process a group must keep improving with good and clear support from CEOs and CFOs.It remains one of the key challenges of the coming years for CROs and also for Group Treasurers. FM Benefits from ERM Demonstrates compliance Enhances behaviours and commitments Reduces costs at risk Improves organisational performance Improves company efficiency Secures growth opportunities Is not stated / is applicable Consolidates risk picture across the group Creates added value Prevents risks and consequently losses Better defines objectives and risk appetite limits Improves risk correlation perception/ understanding 38

Table des matières de la publication Le magazine du trésorier - n°66 - 2ème trimestre 2009

COUVERTURE
SOMMAIRE
EDITORIAL
FINANCIAL HIGHLIGHTS
INTERVIEW
FOCUS
FORUM OF ADVERTISERS
TREASURERS’ ASSOCIATIONS
NEWS

Le magazine du trésorier - n°66 - 2ème trimestre 2009