Annual Report 2017

Rothschild & Co | Annual Report 2017

1. Overview

4. Financial statements

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.