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Rothschild & Co | Annual Report 2017
89
1. Overview
4. Financial statements
3.
Management report
2. Business review
1.2.7.3 THE RISK COMMITTEE
1.2.7.3.1 COMPOSITION
As at 31 December 2017, the Risk Committee was composed of three
members: Mr. Sipko Schat (Chairman and independent member),
Ms. Arielle Malard de Rothschild and Dr. Daniel Daeniker (independent
member).
1.2.7.3.2 RESPONSIBILITIES
The Risk Committee is mainly responsible for:
• advising the Supervisory Board on the overall current and future risk
appetite and strategy, both at the Group and Rothschild & Co levels;
• assisting the Supervisory Board in overseeing the implementation of
that strategy;
• reviewing on a consolidated basis the material risks of the Group, and
the total exposures of the Group’s activities to such risks;
• reviewing the results of the Group’s risk assessment that identifies and
evaluates exposures to risk in the light of internal and external factors;
• reviewing the Group’s broad guidelines relating to risk management
and examining the effectiveness of the risk management policies put
in place;
• reviewing all material new products and new classes of products and
funds that have been approved pursuant to the Group’s New Products
Policy; and
• examining incentives provided by remuneration policies and practices
to ensure they are consistent in the light of the risk, capital, liquidity
and the likelihood and timing of expected earnings for entities.
1.2.7.3.3 ACTIVITY
The Risk Committee meets at least four times a year or more frequently
if so required.
As a result of the change of year end from 31 March to 31 December,
a new meeting schedule has been adopted to reflect this change.
During the nine months to 31 December 2017, the Risk Committee met
three times, with an average rate of attendance of 88.9% to all meetings.
Before each meeting, every member receives a file containing all the
documentation, notes and reports relating to each item on the agenda.
The Chairman of the Audit Committee, the Group Head of Risk, the Group
Head of Legal & Compliance, the Group Head of Internal Audit, the Group
Chief Financial Officer, the Group External Reporting Director and the Group
Company Secretary (and General Counsel of the Company) are permanent
attendees at the meetings of the Risk Committee.
During those meetings, the Risk Committee reviewed the four quarterly
Group Legal, Compliance and Risk reports and examined the Group
strategic and operational risk assessments. In addition, the Risk Committee
reviewed various Group polices, and checked the implementation of crisis
management plans across the Group.
1.2.7.3.4 COOPERATION WITH THE AUDIT COMMITTEE
The Chairmen of the Audit Committee and the Risk Committee consult each
other, whenever they deem it necessary on various subjects, including, but
not limited to, subjects of common interest and/or cross-committee topics
falling within the missions assigned to them, related to the internal control
and risk management system.
The cooperation between the Audit and Risk committees will be reinforced
during 2018 notwithstanding attendance at a committee meeting of the
chairman of the other committee. This cooperation will be formalised
on a semi-annual basis before the meetings of the Supervisory Board
comprising on the agenda the annual and half-year accounts and the
annual report prepared in accordance with Articles 258 to 264 of the Order
of 3 November 2014 on internal control of banking sector companies or
more, depending on the issues, if any.
1.2.8 The Supervisory Board and strategy
In addition to the powers granted to it by law, in accordance with Article
10.2.3 of the Company’s Articles of Association, the Supervisory Board
provides an advisory opinion to the Managing Partner of the Company in
respect of:
• the strategic policies, annual budget and three-year business plan
of the Rothschild & Co Group; and
• any strategic initiative or major refocusing of the business of the
Rothschild & Co Group.
During 2017, the Company’s Managing Partner and the Supervisory Board
conducted a review of the strategic review process that involved, since the
Group reorganisation implemented in June 2012, a Strategy Committee
made up of members of the Supervisory Board. It was subsequently
decided that the Strategy Committee would cease to operate in its previous
configuration so as to involve directly the Supervisory Board on strategic
matters, as part of the normal business of the Supervisory Board. Since
that decision, the Supervisory Board reviews specific strategic matters at
each of its meetings.
1.2.9 Corporate governance code
The Company has decided voluntarily to adhere to the Afep-Medef Code.
The Company is very committed to the principles of good governance and
to the recommendations of the Afep-Medef Code. It should, however, be
stressed that the very principle of partnerships limited by shares, the
Company’s form of incorporation, gives a unique structure to governance
providing a clear separation of powers between the Company’s Managing
Partner and the Supervisory Board, which cannot comply with the
Afep-Medef recommendations without adaptation. In this situation,
the Board takes into account the specific characteristics of this form
of incorporation, and the Board is organised in a way that is adapted to
the nature of the functions conferred upon it by law and the articles of
association as well as by the recommendations of the Afep-Medef Code.