AFD_REGISTRATION_DOCUMENT_2017

RISK MANAGEMENT

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Risk management

P The Group Risk Committee Reporting to the Board of Directors, the Group Risk Committee, created in 2015bto meet the requirements of the Order of 3 November 2014, is tasked with (i) carrying out a regular review of strategies, policies, procedures, systems, tools, and limits, and the underlying assumptions, (ii) appraising all of the significant risks, risk management policies, and changes made to them, (iii) appraising the measures taken to ensure business continuity, (iv) advising the Board of Directors on the AFD Group’s overall strategy and risk appetite. P The Audit Committee Reporting to the Board of Directors, the Group Audit Committee, provided in the by-laws, has been, since the Risk committee’s creation, in charge of (i) checking the clarity of the information provided and the appraisal of the relevance of accounting methods, (ii) the appraisal of the internal control quality on the accounting and financial aspects, (iii) supervising the choice of the statutory auditors. d) Risk monitoring Risk monitoring is ensured by the Group Risk Management Department (DRG) of the Executive Risk department (DXR): by the Counterparty Risks division (DRC) at the individual level of credit risks and the Risk Monitoring Division (DSR) at a consolidated level, both for credit risks and market transactions. This supervision is not exclusive to this department: among other procedures, a semi-annual review of non-sovereign counterparties is conducted by geographical regions, credit transactions are referred for a second opinion (DXR/SOP) and the Corporate Secretariat provides strategic and financial guidance (DFC/PSF). e) Methods of informing executive officers The executive officers are informed through different channels which are essentially committees and executive officer memos. The Internal Control Committee (Cocint) comprises members of the AFD Executive committee (including the Chief Executive Officer of Proparco), the director of the Group Risk Management Department (DRG) and the head of Proparco’s risk management unit (DRI). It makes sure that systems are in place to monitor the activities and risks, per the Order of 3 November 2014, to ensure the AFD Group’s internal control system operates effectively. It mobilises management to put these systems in place. It is through this body that the head of Periodic Control (the General Inspection department (IGE) and the head of Permanent Control and Compliance of the AFD Group report on the fulfilment of their roles. The committee is also regularly informed of the serious incidents and risks updated in the operations risk mapping. The Risk committee (Coris) is responsible for handling its own risks within the field of operation of AFD Group, with a particular focus on macro-economic risks in the countries in which it operates (“country risk”) and credit risks (“counterparty risk”). It is chaired by the director of the AFD Executive Risk department (DXR), and is attended by general management.

In its “Compliance” configuration, the New Products and New Activities committee (Coconap) examines twice a year (i) any changes to French or local laws or regulations which affect AFD Group, (ii) any significant compliance events in the respective areas of activity, (iii) the list of operational non-compliance incidents, (iv) the updated compliance, fraud and corruption risk mapping and (v) the progress of corrective measures. For “Compliance” matters, the Coconap is chaired by the director of the AFD Executive Risk department (DXR). The role of the Accounting, Finance and Management Control committee (Cofico) is to examine and monitor AFD’s financial, accounting and management control activities. It is chaired by the Chief Executive Officer or, if absent, the Deputy Chief Executive Officer. The role of the Partnership committee (Copar) is to centralise and collate all the Group data on its partnerships with French development operators (French regional collectivities, NGOs, companies, foundations), inter-state organisations, international foundations and NGOs, bilateral or multilateral donors and stakeholders in the developing countries, and to investigate the merits of entering a new partnership or renewing an existing one. It is chaired by the Chief Executive Officer or, if absent, the Deputy Chief Executive Officer. The role of the Credit committee (CCR) is: P to verify all the due diligence carried out at the time of project appraisal; P to examine the financing proposals prior to their submission to the AFD decision-making bodies; P to validate the terms of the resolution proposals or decision to grant funds; P to log any reservations expressed by the Permanent Control and Compliance Department (CPC), the Second Opinion Unit or any other member of the committee; P to record the sustainable development appraisal and the final opinion of the Second Opinion Unit and log any follow-up rights issued. The chair of the CCR will be appointed according to the value of the applications submitted, with provision for three levels of delegation (director of the regional department, director of the executive operations department (DOE) or general management). Information is also passed on to executive officers via memos which formally record, for example, the verdicts of the Second Opinions Unit or compliance opinions, legal warnings or notification of thresholds being exceeded. Finally, in the last quarter of 2016, the Executive Risk department (DXR) introduced a memo (“Monthly risks memo”) to inform management of issues, topical information and areas requiring attention and vigilance in all things risk-related. It is sent to the executive directors, members of the Management committee (Codir) and directors of local offices.

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REGISTRATION DOCUMENT 2017

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