The Federation of European Risk Management Associations (FERMA) has called on the European Commission to include enterprise risk management (ERM) in non-financial reporting guidelines.
The move would potentially be a good thing for companies that use captives if they can demonstrate they have firm control of their own risks and are pro-active in managing those in a number of ways.
According to FERMA this is the best method for companies to approach the new EU requirements for large companies to report on their non-financial or corporate social responsibility risks.
This request is at the centre of FERMA's response to the Commission consultation on non-financial reporting guidelines.
Under the Directive, which goes into effect in 2017, large public-interest entities, such as listed companies, should disclose in their management report relevant and useful information on their policies, main risks and outcomes relating at least to: environmental matters, social and employee aspects, human rights, anticorruption and bribery issues, and diversity in their board of directors.
FERMA explained that a large proportion of its 4700 European risk and insurance managers work for companies that are within the scope of the Directive. As skilled specialists, they are responsible for managing the enterprise risk management process.
Jo Willaert, FERMA president, said: "It is difficult for specialists in each department to connect different aspects of risk across functions, leaving grey areas where reporting may be incomplete.
“We, therefore, urge the Commission to recognise in the guidelines the fundamental role of risk managers and the value of ERM methodology in the reporting of non-financial or corporate social responsibility elements, which require a deep understanding of the business model of the organisation."
He added: "Risk reporting is a key element of the risk manager's role. Because of the cross-functional nature of the risk manager's mission, he or she is the best placed person in the organisation to provide assurance that the various types of risks, including those related to corporate social responsibility, have been identified and managed."
FERMA, European Commission, ERM, Europe