To ensure the proper execution of FMO's operations, several tools are in place. Our internal audit function assesses the effectiveness and efficiency of the processes based on a risk analysis. FMO's directors also perform annual operational risk self-assessments, which evaluate controls and set action plans to improve these controls. Follow-up on the action plans and audit findings is carried out quarterly.
If operations have not functioned properly, we record an incident. Each quarter, an overview of incidents is reported to FMO's Management Board. The Audit & Risk Committee is also informed of such incidents via a report by the Audit, Compliance & Control department (ACC). This report gives insight, for instance, into aspects that need to be improved and where FMO's key risks lie.
In terms of FMO's operations, the proper execution of our processes carries the greatest risks. We have intensively reviewed and improved all process descriptions, which are accessible to everyone via the intranet. Process descriptions are reviewed and updated yearly. Knowledge of procedures and processes remains an important priority, especially when changes in regulations, for example, require changes in internal procedures and processes.
Knowledge and risk awareness are also an important aspect of management steering and control. As far as soft controls in our organization are concerned, we will continue investing in behavioral skills, such as awareness, coaching and maintaining clear accountability. Attention is also paid and will continue to be paid to interdepartmental cooperation throughout FMO.
Control of (sometimes complex) financial products can be complicated, so in the past we implemented a Product Approval Process. It may be, for instance, that products do not meet clients' needs, not all risks are identified or the product cannot be registered properly. This Product Approval Process has proven to be a valuable tool. In 2011 we furthermore thoroughly reviewed management of local currency derivatives. Knowledge on these products and processes is further bundled in a so-called Knowledge Street and communication between many stakeholders, like employees of front office, Mid Office, Financial Markets and Risk Management, is intensified.