Its is also imperative that Ferma continues to deal with the many regulatory changes that keep emerging from the European Union’s lawmaking bodies, said Mr Dennery.

“There are new Directives on the table. Some are nearly adopted, others are in the pipeline,” he pointed out. “The main one for us of course is Solvency II, and we are very concerned about its application for captives, for example.”

Solvency II could also affect the relationship between risk carriers and buyers, as insurers may become more demanding of their clients’ risk control processes. In particular Mr Dennery is concerned about the consequences of higher capital charges for insurance companies and the consequences for relationships between carriers and buyers. “We have to be very careful and look at how this relationship evolves,” he said.

Regulation is creating plenty of work for risk managers. But, according to Mr Dennery, it has also helped to elevate the profile of the profession by strengthening the compliance requirements of European companies.

But it is not only regulation that is boosting the role of the corporate risk manager. Several high profile cases in which risk has been poorly managed have brought the importance of the role to the fore.

The cases of BP last year and, more recently, UBS have shown that flaws in risk control processes can be costly for companies and their managers.

Mr Dennery noted that the last few years have highlighted the extent to which public opinion is less tolerant of companies that fail to keep track of their risks.

“Every time a crisis takes place, the first reaction of public opinion is to ask what can be done so that it does not happen again,” Mr Dennery said. “It is an expectation first of all of politicians, but also of chief executive officers and chairmen of companies, who have been called with increasing frequency to explain to the public what happened and what they are going to do to avoid those risks that effected their companies.” Top brass is also turning to their risk function for answers. “A huge responsibility has been laid on the shoulders of risk managers,” he argued.

Corporate governance is another important subject for Ferma. Mr Dennery pointed towards a guidance note, produced by Ferma and the European Confederation of Institutes of Internal Auditing, ECIIA, on the application of the 8th EU Directive on corporate governance. Work on the second part of the guidance note, focused on chief executive officers and senior executives, is about to be concluded, he said.

The federation has also drafted answers for the EU’s green paper on the 9th corporate governance Directive. This response focuses on two articles within the paper that deal with risk management-related issues.

“Ferma was asked its views on whether boards should approve and take responsibility for the risk appetite of companies,” Mr Dennery explained. The federation, on the whole, is against such a development, he said.

“This is a new evolution that would put more constraints on the shoulders of boards. We are very careful about this, because it is quite difficult for companies to define their risk appetite. And listed companies already need to make clear the strategic risks they are willing to take, otherwise they will not be attractive for investors,” concluded the vice-president.

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