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Rothschild & Co | Annual Report 2017
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1. Overview
4. Financial statements
3.
Management report
2. Business review
As the Group’s parent company and financial holding company, Rothschild
& Co is in charge of the consolidated prudential supervision of its
consolidated entities and of the implementation and the monitoring of
the efficacy of the internal control system at the Group level. This involves
the elaboration of procedures and policies implemented homogeneously.
Policies were implemented through different sharing initiatives and
harmonisation of best practices. Almost 40 different policies are currently
implemented in the Group throughout all five main regions of the world
with almost 50% of them reviewed in the course of the 2017 financial year.
Employees’ awareness regarding those matters is ensured by dedicated
training sessions and the disclosures of guides on the Group’s intranet.
Regarding the fight against corruption, the Group requires from its employees
to act with honesty and integrity and has a zero-tolerance approach.
Involvement in any form of corruption has serious consequences, including
dismissal or termination of employment. A Group Policy on Anti-Corruption
has been established, in order to comply with the applicable regulations
such as the UK Bribery Act which aims at preventing such crimes.
It deals, for instance, with the acceptance or the offering of gifts and
entertainment by employees within the framework of their jobs since this
might lead to a suspicious or reprehensible situations. In order to avoid
such situations, each entity must determine proportionate limits for the
acceptance or the offering of gifts that do not require approval. Any gift or
entertainment that exceeds these limits must be approved by the relevant
head and the local Compliance function. In addition to this, persons to
whom this policy applies must not accept gifts such as cash or any other
gift convertible into cash such as shares, share options or bonds.
Recent developments in France with the so-called “Loi Sapin 2” will
complete and reinforce the Group’s anti-corruption framework.
Regulators continue to emphasise the need for financial institutions to link
risk, behaviour and variable remuneration by ensuring that incentives for
employees (especially financial), foster a culture of appropriate risk-taking,
compliance and good governance.
Accordingly, during 2017 and consistent with the Group’s high standards and
the expectations of its regulators, Rothschild & Co has decided to introduce
in 2018 a new process to provide a more empirical and demonstrable link
between the fulfilment of compliance and risk obligations and ratings made
in the annual Performance Review Process, including variable remuneration,
if applicable.
From January 2018, the following data (collected by local and Group
compliance) will be used for this purpose:
• completion of mandatory Group-wide and local compliance training;
• compliance attestations (e.g. personal account dealing /outside
business interests, compliance manual comprehension, etc.); and/or
• operational risk incidents and breaches revealed as a result of risk and
compliance monitoring or reviews.
As part of the annual appraisal process, these records will be analysed
to determine whether an individual has met the Group’s expectations. A
“cluster” of employees with a high number of breaches in the same team
will also be taken into consideration in assessing their managers.
5.5 Measures implemented to promote
consumers Health & Safety
Given the Group’s activities, there is no specific need to implement
measures to promote clients’ Health & Safety.
Paris Office has to report directly to the CNIL all new private data treatments
(of clients’ and staff’s private data) in concordance with its procedures.
The safety of servers and records systems (and therefore sensitive and
confidential data) is ensured by groups of security driven by the Active
Directory (AD). Depending on the rights attributed to AD groups, the user
may or may not have access to files in read-only or in read/write. All new
joiners are made aware of the best practices regarding the security of
information by the head of the security information system.
The firm has implemented a programme of work to address the General
Data Protection Regulation that comes into force on 25 May 2018. The
firm has obtained legal advice on the approach to this legislation and a
wide-ranging, risk-based project is well underway. The focus of remediation
activity has been on areas of the firm that manage large amounts of
personal data. A data protection framework has been put in place, including
governance through appropriate Rothschild & Co committees, an updated
data protection policy and an awareness and education exercise across the
firm.
The Audit Committee and the Risk Committee, both specialised committees
of the Supervisory Board of Rothschild & Co, are kept informed on the
implementation of the technical and organisational controls designed to
demonstrate a proportionate level of compliance with the General Data
Protection Regulation.
5.6 Other actions implemented to promote
human rights
Rothschild & Co does not carry out activities to promote human rights, other
than those mentioned in the previous sections of this report.