Financial Reporting Council - Developments in corporate governance 2011

The FRC pushed this out today on progress in implementing the UK Corporate Governance Code (and of less interest to me, the Stewardship Code. Outside of the news of what is to come (more consultation in 2012 on Audit Committees, Risk Management and Internal Control elements of the code) some interesting trends are reported;

• Code requirements on board and board committee composition all above 80% on the "comply" front - strangely the requirement for having at least half NEDS on the board was the worst area of compliance for FTSE 350 firms.
• Still having "diversity" and "gender diversity" spoken of in the same breath - more to come on that subject from me another time
• FRC are attributing some of the gripes from the industry on independence criteria and difficulty in recruiting good quality NEDs on their inability to look beyond "the usual suspects", and by doing so, they will enhance diversity.
• 80% of boards put themselves up for re-election annually in their entirety (one of the more controversial elements of the last set of Code revisions).
• Discussions regarding the expanded nature of the Board's responsibility for Risk (to essentially include consideration and setting of Risk Appetite) has led the FRC to schedule a revision to the old Turnbull guidance in 2012.
• Still griping about "boiler plate" annual report text.
• Some of the "explanations" given for non-compliance still said to be lacking
• Chairman's Statement suggestions made by the FRC appear to be bearing fruit
• Lack of consistency around the application and reporting of Board evaluations
• Disclosure on business model, strategy and risk (massive for Solvency II disclosure policy/SFCR purposes) is, because of a lack of guidance, allowing companies to determine their own levels of disclosure. However, the FRC are expecting more from companies in this regard.
• Very critical of the extent of reporting from the Audit Committee, hence the consultation due in early 2012. Also goes on to be untopically lightly critical of remuneration committee reporting in the same regard!

FERMA Risk Conference - various content

Seems to be a good amount of debate and activity over in Stockholm for the FERMA conference - I heartily recommend the blog.

So far the VP of FERMA has blown FERMA's trumpet, a futurologist (now there's a profession!)recommends looking out for "ninja" trends whilst referring to risk professionals as "sexy magician types", and the head of an enormous German bank telling us that "risk management deficiencies" were at the heart of the financial crisis (as opposed to avaricious bankers). The phrase schadensh*zen springs immediately to mind...

In addition, there was a nice piece on Captives under Solvency II (I liked the parallel between a tightening reinsurance market alongside the expense of allocating additional capital to captive vehicles looking like a double-whammy), and FERMA's VP in the action again recommending that the risk profession engages in some 'upskilling' in order to be engaged more fully with the board, noting "It is all about talking the language of the board...and that is financials".

I wouldn't agree with that, but I appreciate the sentiment in the context of the actuarial professions' upskilling exercises with the CRO/Head of Risk Function role in mind.

AIRMIC and Cass Business School - Full study available (at a price)

Having already blogged on the executive summary of this paper, I was delighted to see the full version has been released (available here) - however, you may very well need to pay up (pdf version is around £100). I would suggest if you have reverse stress testing work to do that it would be money well spent.

International Insurance Society Annual Seminar 2011 - insights from Toronto

Having had a hard look around for material from this weeks IIS seminar (plenty of big hitters present), I have come up empty handed on accompanying speeches/presentations.

This article does let slip a few pieces, which were worth logging;

• Head of Canadian regulator urging insurers to move risk management efforts to the forefront by enhancing the CRO role and engaging properly in stress testing - talking my language there!
• She also added that a global capital standard would benefit the industry, and while Solvency II is an improvement, it is probably insufficient.
• Research from Robert Klein presented suggested that the US should go in for a more modern regulatory regime (citing "antiquated" US capital standards). This runs contrary to the views of the NAIC head who spoke in Bermuda only last week. Would love to see Prof. Klein's research, but couldn't find it today.

AIRMIC Conference 2011 - Presentations now available

Was very kindly directed to these by the AIRMIC guys - two of use in my line of work were the Solvency II specific presentation from some Allianz reps and a good one from Lloyds on emerging risk - the former gives some decent insights as to how a massive organisation has to administrate the Solvency II project, while the latter is a decent benchmarking piece for performing qualitative risk identification, analysis and synthesis.