Newsletter N°51 January 2013

A New Year message from the President

Dear colleagues, the year. Details will be on the website and in the newsletter.

We just have finished a very exciting My aim as President is to involve you, our members, in these year, full of challenges, but also full of activities as much as possible, by listening to your views or by achievements. Among the high points getting your active participation. You can let me know your was the wonderful seminar in Versailles. comments through your association or direct via our executive This was the first time that FERMA had a manager Florence Bindelle at [email protected] major event in France and it meets our We are also asking for your comments on this newsletter, so it objective of bringing FERMA activities Jorge Luzzi is as informative and useful as possible for you. Please answer to the biggest economies in Europe. our readership survey which you can find below. This already promises to be an interesting and exciting year for I would like to wish you all a happy and prosperous 2013. I FERMA. The FERMA Forum in in the , hope I will meet many of you. starting on 29 September, when we can all meet, is a very

special occasion, but there are many other activities throughout Jorge Luzzi

What do you En route to Maastricht – Forum countdown think of the I’ve been in the event industry for quite a few years now and I still love this FERMA image. You’re on a platform waiting for the train. At first it’s just a humming far away, then it becomes a vibration, a whistle at close range and without realising, newsletter? you see it coming at full speed, passing you by in a minute. Soon it’s just a point on the horizon. Do you like the FERMA newsletter? Do you think it The Forum is my train. I’m checking what’s going in my trunk: needs changing? Please Venue, nice and neat! help us keep improving Veronique De Hertogh the FERMA newsletter by Hotels, a few more offers available! giving us your comments. Transport, new lines operating from Maastricht! It should not take more than two or three minutes My huge case is almost ready: 85 percent of the exhibition booked, 32 sponsors in. It is all so to answer this 9-question promising. survey. Answers are But there are still many points to go through before I catch the train. How are the Dutch caterers completely confidential. going to take the challenge after the renowned French cuisine in Versailles? No doubt they will add http:// their own spices! How is the Market Place going to look? Which activities are we going to plan? www.surveymonkey.com/ Which speakers will be present and when? s/3VTLWBT The Forum Committee is meeting in a few days and I’m expecting their decisions about the workshops and talk leaders. I will tell you more about the programme in the next newsletter. In the meantime, I must come up with a plan to promote the Forum so we reach our target of 1500 participants.

Don’t miss our event trailer and the video from Maastricht Convention Bureau when the Forum website opens; it will be very soon. You’ll just want to jump on that Maastricht train!

Did you know? As from 25 March, Maastricht will have its own airline. This new company will operate to three destinations: Amsterdam, Berlin and Munich. Maastricht Airlines is targeting the whole area, including and Germany. More ways to join us at the Forum!

Veronique De Hertogh Project Manager

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See the big picture at the 2013 FERMA Forum We’re living in a riskier world. It’s complex and invite a number of industry leaders to take a presidential- and fast moving. Risk managers need to style approach," she explains. Each participant will have be equipped to inspire, educate and around 15 minutes to present their views on a chosen topic, influence, and these are the central themes with time allowed at the end for questions from the floor. of the 2013 FERMA Forum around which The controversial subject of reverse discrimination in the programme will turn. Scandinavia will be the first topic to be aired at the very With the New Year, it’s now full speed popular ladies’ lunch at the Forum, with a second speaker Julia Graham ahead for the programme committee to providing an insight into her journey and experience of being a finalise topics, speakers and workshops, and, of course, fit them chairman at the boardroom table. all into a busy, three day event. Workshops will follow the Forum themes of inspire, educate The committee, chaired by FERMA board member Julia Graham, and influence, and within that framework the committee wants believes that getting a global view is an important consideration to ensure that topics that members really want are included. in the choice of keynote speakers and some of the other Member associations and forum partners are being consulted sessions. to make sure the event hits the right targets. Another consideration is that the Forum should attract an experience “Risk managers need to see the big picture, the context in which spectrum of the risk community, from students to chief risk their businesses are operating and to have an enterprise officers, so the sessions will be graded to suit different levels. perspective,” says Julia. “Sometimes when you’re down among the weeds, you can lose sight of these things, so this is about Julia describes the approach for Maastricht as “continuity with investing in our education.” innovation.” She also offers the tantalising prospect: “And two years after Maastricht, we may be more radical…” Every conference needs fresh ideas, and there will be some changes in 2013. Julia explains: "The risk manager, broker and Ideas welcome insurer panels are well established, but this year we are going to The programme committee welcomes suggestions from start with the risk managers and ask them for their key issues associations and their members for speakers and topics. and challenges, which will help to set the scene for the Forum. Contact them by email to FERMA’s event coordinator, Insurers and brokers will then develop their responses. Veronique De Hertogh at [email protected] “For insurers we're going to move away from a traditional panel

Some things you (probably) didn’t know about Maastricht

 Most Europeans have heard of the southern Netherlands city Maastricht because it gave its name to the Treaty on European Union which was signed here on 7 February 1992. There are, however, some other things about Maastricht that you may not know:

 Maastricht is within walking distance of Belgium and cycling distance of Germany.

 Anyone walking a straight line from the train station into Maastricht will cross the beautiful 13th century Sint-Servaasbrug over the River .

 The glorious musketeer Charles de Batz-Castelmore, better known as d’Artagnan, died in 1673 during the siege of Maastricht by the armies of the French king Louis XIV.

 Maastricht is in the province of , birthplace of the very pungent Limburger cheese.

 Maastricht is a candidate for European capital of culture in 2018.

 Maastricht provincial government buildings on the Meuse, where the Maastricht Treaty (formally, the Treaty on European Union) was signed on 7 February 1992.

Maastricht provincial government buildings Limburger cheese Page 2 FERMA Newsletter N°51 ● January 2013

Letter from Brussels Marie Gemma Dequae joins IRM board You will have seen from this newsletter that FERMA has appointed its first full time European Affairs FERMA’s scientific advisor Marie Gemma Dequae Representative, Julien Bedhouche. Julien, who has has joined the board of directors of the Institute of a master’s degree in European law, will play an Risk Management (IRM), the enterprise risk important role in strengthening FERMA’s ability to management education body. She was President of represent the interests of risk managers across our FERMA from 2005-2009 and a board member. membership with the European Commission and other European bodies. Marie has both an academic and practical background in risk management. She has a PhD in The process of EU law making is a complex one, Marie Gemma Dequae applied economics, and before going into industry, and FERMA members will benefit from having a full she taught economics and finance at the Catholic time member of staff with his knowledge on the University of Leuven and at the business school Vlekho in Brussels. FERMA team. He will also be part of our mission to She maintains strong links with a number of European management make the operations of the EU more transparent to schools in risk and governance. members and reinforce our collaboration with members on EU regulatory developments. Her professional experience involved 23 years as group risk and insurance manager for the Belgian materials production group I have now joined the scientific committee of Visit Bekaert. Marie is now a board member of Belfius Bank and Belfius Brussels, the city’s official promotion organisation, Insurance in Belgium. with the idea of strengthening awareness of the role of FERMA and other associations in the life of the FERMA appoints full time European adviser city. This is already bearing fruit. Association managers have been invited to attend the FERMA has appointed its first full time European “European Association Summit” which will take Affairs Representative to help promote the place on the second day of the important European interests of FERMA members with European Business Summit in Brussels on 15-16 May. institutions and in terms of EU legislation. He is The European Business Summit is similar to the Julien Bedhouche, a French national with a World Economic Forum on a European bias. It masters’ degree in European law from Rennes attracts about 2000 delegates from about 60 University in Brittany. countries with a strong representation of top level Julien Bedhouche Julien will contribute to monitoring and politicians as well as business. This year the theme assessing forthcoming EU legislation in the field is new trends in industry, which will be of particular of risk and insurance management and evaluate the impact of interest to some association managers as well as regulatory proposals on FERMA members’ activities. He will FERMA members. coordinate the formulation of FERMA positions in close We already have a good relationship with a few of collaboration with members. the many other associations based in Brussels: the After gaining experience in European affairs working as an assistant internal auditors’ organisation ECIIA, insurance to a member of the European Parliament, Julien became European intermediaries’ BIPAR and directors’ association affairs officer for the Belgian Banking Federation (FEBELFIN). He ECODA. Clearly there are others with which we also worked for a year in the corporate communications department have interests in common, and I hope to use my of the investment banking branch of BNP Paribas in Sydney, work with Visit Brussels as a springboard for future Australia. collaboration. He said: “I have had a great interest in European matters since I We are not a large association by comparison with spent a year in Spain in 2006 as part of the EU educational some, but there is much we can do to promote risk exchange programme ERASMUS, when I chose to study EU law. I management and the interest of risk managers. really believe that the European project is a way for our nations to Julien’s appointment and our increasing links with face a more and more competitive world. other European organisations are important steps in this direction. The President of FERMA Jorge Luzzi said: “Julien Bedhouche’s appointment enhances the service that FERMA provides to its members. Many developments at European level can have an important effect on risk and insurance issues, but it often takes time for the implications to become clear. With Julien in place we will be able both to keep our members up to date and represent their views with European institutions.”

Julien said: “This new position is exciting. As a naturally enthusiastic person, I want to be a great addition to the FERMA team in Brussels.” Florence Bindelle Julien Bedhouche Executive Manager EU Affairs Representative

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European Affairs Environmental law patchwork creates confusion This second week of January was Directive has been very complex to ELD implementation has left industry dedicated to some working sessions integrate into national laws. The confused. Participants from the public about a possible review of the competent authorities had no practical sector and industry were quite clear on Environmental Liability Directive (ELD). experience with the ELD regime and they this; Professionals are facing great The first was set up by industry, the preferred to use pre-existing legislation. uncertainty while dealing with authorities second by Bio Intelligence Service. Bio Differences between previous laws and that are struggling to know if ELD is Intelligence is a consulting firm contracted the ELD transposition were too small, relevant or if they should rely on pre- by the European Commission to conduct hence only a few cases have been existing legislation. several studies on the ELD before the treated under the ELD regime. The private sector is very well aware of official report from Neither authorities nor the industry have environmental risks, and most “The Directive the Commission the sufficient experience, expertise or companies are taking this issue has been very planned for early willingness to enforce or comply with the seriously. In many industries, it is now 2014. In between complex to ELD regime. part of their risk management systems. integrate into the two, the Commission held a The 27 different transpositions have Companies are looking for a scheme national laws” meeting of national completely altered the core of the ELD that will give them strong and affordable experts. and led to a patchwork of laws. As it is insurance coverage. At FERMA we have framework directive, member states always strongly advocated freedom of Since its adoption in April 2004, the ELD were free to choose the liability system action in the choice of coverage, not a has been a mild compromise, with a lot of (strict or joint), how to assess the mandatory financial security system that provisions. This was the best that evidences of environmental damage and could heavily distort competition member states could achieve at the time; how to achieve the severity threshold, between European industry and the rest it was just before the EU enlargement in that means the level of damage to the of the world. May 2004. It had a difficult birth, which environment required to trigger the will have serious consequences when the FERMA has had a consistent position on application of the ELD regime. time comes to assess its implementation. this issue since last year, shared by a Confusion growing number of industry participants. The transposition phase lasted from 2004 to 2010. It appears today that the The attitude of member states towards Julien Bedhouche, European Affairs Representative Commission wants to extend risk reporting requirements The European Commission wants to put Commission should focus on getting Marie Gemma Dequae, forward a proposal this year to extend the existing measures, such as the 8th FERMA scientific adviser, reporting requirements for companies Company Law Directive, consistently added: “A balance has to with regard to their management of non- implemented in all member states. be made between relevant financial risks by amending the information provided to Accounting Directive. More specifically, FERMA has stated that shareholders on to base the explicit disclosure of company’s risk their investment decisions Marie Gemma Dequae This initiative appears among the appetite to shareholders might not be the and the protection of these proposals contained in the action plan for most suitable way to act and help investments, which requires a certain level company law and corporate governance European companies build sustainable, of confidentiality.” released by the European Commission long term strategies. on 12 December 2012. It follows the She said that many indicators, such as Commission’s 2011 green paper on the Vice President Michel financial reporting, debt, gearing and so EU corporate governance framework to Dennery said: on, are already in place to give information which FERMA provided a response. “Transparency of on a company’s approach. In addition, key information related to risk societal risks such as health and safety The Commission proposes initiatives management is a key issue and environment protection are already along three main lines: to enhance for FERMA. It helps highly regulated in most EU countries and transparency, improve shareholder companies to improve their reporting expectations are high, even if not Michel Dennery engagement in EU companies and knowledge of their risks obligatory. facilitate cross-border operations. and take appropriate Strengthening disclosure of risk decisions to reduce and mitigate them. FERMA will now formulate a response to management strategies is one part of the Doing so, they will reassure shareholders the action plan and will be happy to share transparency workstream. and the market of their ability to drive comments from the risk management profitability. Nevertheless, regulation must community with relevant EU stakeholders. In the consultation to the 2011 green consider limiting disclosure that could paper, FERMA argued that further Contact: Julien Bedhouche at affect competitive advantage, in particular legislation was not immediately [email protected] in comparison with other member states necessary. Instead, it said, the or non-EU countries.”

Page 4 FERMA Newsletter N°51 ● January 2013 Cyber risks Cyberare serious risks are serious

Every business needs leadership, information assets,” the report planning and training that extend advises. Leadership in risk beyond IT to encompass every These include: management – your views stakeholder who owns information assets if they are to manage their  human resources (employee requested cyber risks. This is one of a data, including salary, health and principal recommendation from a performance) Your views are now requested on research collaboration between leadership in risk management as  finance (accounts) FERMA, Harvard Business Review part of FERMA’s latest research and Zurich Insurance.  marketing (product information project with Harvard Business and plans) Review and Zurich Insurance. Please The project involved a survey of  legal (contracts) follow this link: Leadership in risk FERMA members and an expert management survey panel discussion in which FERMA  compliance and audit teams board member Julia Graham  third-party channel partners It’s clear that good risk management needs participated. The final report (trade secrets) leadership from the top, but it’s not clear how often including an outline strategy for that happens. Most risk managers would like to know The study found that many managing digital risks will shortly be where their company stands in relation to others in companies still do not devote available on the FERMA website. the same sector. sufficient strategic attention to The study says that given both the cyber risks, despite an increase in The survey questions cover risk culture, the board’s incidence of attacks and the frequency, and severity of the attitude toward risk and how often it reviews risk severity of penalties for data threats and harsher regulatory management policies and processes, risk appetite breaches, companies need to take penalties for compliance and loss and how it’s determined, and decisions on risk an enterprise risk management of sensitive data. It concludes: priorities. One objective is to discover if it is possible (ERM) to deal with cyber risks. “They must improve their to create a metric for risk leadership. institutional preparedness to Implementation should range from Harvard Business Review and Zurich will follow up combat cyber threats and losses, incorporating cyber security as part with a research report which will be available to which are inadequately covered by of a board-level corporate strategy FERMA members. to IT-oriented tactics that permeate traditional liability insurance.” the organisation. “ERM should The webinar of the panel involve every department, discussion is still available here stakeholder and partner that owns Worth Reading An invitation to Lyon Making the Most of the Internal Lyon may not be the place that quickly springs to the mind of most foreigners planning a trip to Audit Function: France. This city in eastern central France is, Recommendations for however, a major centre for banking, chemical, pharmaceutical and directors and board biotech industries. It has a significant software industry and a growing local committees start-up sector. Lyon is also famous for gastronomy. A joint report from the It is here that more than 1500 risk professionals will meet between 6 and 8 European Confederation of February for the conference of the French risk management association Institutes of Internal Auditing AMRAE, the annual Rencontres. AMRAE welcomes risk managers from (ECIIA) and the European Confederation of outside France to the Rencontres and not just French speakers. English is Directors’ Associations (ECODA) the language for a good proportion of the sessions. This paper provides useful guidance to boards, The theme this year is economic growth, for as the President of AMRAE, governing bodies and individual directors on how to Gilbert Canameras, states: “It has escaped no one that the question of make effective use of the internal audit function, growth is at the heart of national and international debates, and the major particularly in respect to assurance concerning the concern of our businesses.” adequacy of the organisation’s risk management For more information and to register, see http:// and internal control systems. It complements the rencontres.amrae2013.insight- recommendations published by FERMA and ECIIA outside.fr/ (in French) or on the risk management provisions of the EU 8th contact Bénédicte De Luze at Company Law Directive. [email protected] This report is available on FERMA website at Making the most of Internal Audit—GUIDANCE

Page 5 FERMA Newsletter N°51 ● January 2013 Regulation of loss adjusting experts would affect FERMA members

The inclusion of experts who deal with  Exemption for loss adjusters and assessors from insured losses in the draft Insurance specified registration procedures for insurance Mediation Directive 2 (IMD2) is intended intermediaries and authority to carry on activities by to protect consumers, but could have a way of simple declaration.

considerable effect on commercial The profession of loss expertise is conducted in different ways insurance buyers. throughout Europe. Moreover, there is not a large pipeline of people coming into the profession who can offer the right skills. The Federation of European Loss Especially for large and complex claims which businesses Adjusting Experts (FUEDI) strongly suffer, an international resource is essential. Mark Vos supports the principle of mutual recognition We understand that it is not easy to insure consistent among member states. As the wording of IMD2 now stands, standards among thousands of European businesses however, there is a risk of creating a more inflexible system, describing themselves as loss adjusting experts, when many one similar to the US where loss adjusting experts can only act of them are tiny operations, sometimes only one person. I will in the state where they are licenced. add, however, that some of these small loss practices are Currently, there is no European-wide regulation of loss very specialised and expert. In addition, there are loss adjusting experts. Control of our adjusting experts who are already indirectly regulated via the “ The professional standards is primarily a service contracts with insurers, linked to national solvency profession of matter of self-regulation, professional requirements. requirements from the insurers who loss expertise We believe it is in the interest of FERMA members to maintain appoint us, national regulation or a the ability of their insurers to involve qualified industrial loss is conducted in combination of these factors. adjusters to service their insurance programmes promptly different ways As a result, the German insurer of an throughout Europe. FUEDI argues, therefore, that to avoid throughout Italian FERMA member can instruct an restrictions on cross-border service provisions any recognition Europe” international loss adjuster or assessor of a loss adjuster should immediately cover all EU-members with expertise in chemical plants, for states. instance, to examine a loss in a third EU member state. Any IMD2 will come into force in 2015 at the earliest, but there are national regulation of loss adjusting experts must have a single already signals that questions are raised whether loss passport system, or the insurer could be restricted to a local adjusters should be managed as insurance intermediaries firm which might not have the required level of knowledge or under the IMD2 directive. The text is likely to be formally did not meet the client’s expectations. adopted at EU level this year, and there will then be further The latest version of IMD2, published in July 2012, included work on detailed implementation by the transposition of the insurance after-sales services “such as loss adjusters” for the directive into national regulations. first time. For all those now mentioned, the directive now FUEDI will, therefore, monitor both the EU consumer objectives proposes: for post-catastrophe insurance services, etc, and the potential impact on members’ ability to provide prompt, flexible cross-  Mutual recognition of professional knowledge and border services throughout Europe on the basis of ‘the right ability, as evidenced by registration and proof of man (or woman) at the right place’. professional qualifications acquired in another member Mark Vos is the incoming Vice-President of FUEDI. state. See also: http://www.out-law.com/en/topics/insurance/  Effective, proportionate and dissuasive administrative european-developments-affecting-insurance/imd2-proposed- sanctions and measures by competent authorities in revisions-to-the-insurance-mediation-directive-in-2012/ respect of breaches provided by guidelines to member states.

FEDERATION OF EUROPEAN RISK MANAGEMENT ASSOCIATIONS - FERMA AISBL

This Newsletter is produced by FERMA. If you have any questions concerning this Newsletter, please contact Florence Bindelle at FERMA on +32 2 761 94 32 – email: [email protected]

© Copyright 2013 FERMA. All Rights Reserved. No distribution or reproduction of this issue or any portion thereof is allowed without our written permission except by the recipient for internal use only within the recipient's own organisation.

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