Supervisory Board activities
FMO's Supervisory Board and its committees work through regular, pre-scheduled meetings, and on an ad hoc basis throughout the year.
A transparent formal reporting structure is in place, and Supervisory Board members are frequently in contact with the Management Board so they remain fully informed and can provide advice at all times. The Supervisory Board Chairman meets the CEO informally once a month. With the exception of evaluations and appraisals, the full Management Board meets the full Supervisory Board at all pre-scheduled meetings.
The Supervisory Board held four regular meetings and two strategic sessions in 2011. The Supervisory Board is careful to ensure the right balance between governance and performance, so that it devotes attention not just to governance matters, but also to strategic and business issues. The attendance at the regular meetings was 100%.
Last year, explicit attention was devoted to capital management and growth. In particular, the Supervisory Board looked at capital requirements, solvency risks and their implications for FMO's operations. Good profitability is essential to enable FMO to continue growing its portfolio and annual investment volumes.
The Supervisory Board looked closely at the financial risks to which FMO is exposed: liquidity; financing and private equity exits; capital structure and funding; and third-party funds. The Board was satisfied that although the market turmoil requires constant vigilance, FMO is very healthy in all these areas.
The Supervisory Board was highly involved in the preliminary work done last year to develop FMO's new strategy for 2013-2016. The bank reaffirmed its mission to fight poverty in developing countries through providing sustainable finance in sectors that have the potential for high development impact. FMO does this by providing finance and knowledge to entrepreneurs in developing countries.
The Supervisory Board has asked the Management Board to develop concrete strategic targets in areas such as development impact, loan production, organizational developments and funding. It should be noted that the strategic reassessment on which FMO is working will not lead to a higher risk profile for the bank; very high-risk investments will only be possible if third parties assume some or much of the risk. In this respect, FMO received a great deal of support from the Dutch government in 2011, for example through the funds which FMO manages for the Dutch State.
Last year close attention was also paid to FMO's financial reporting and financial risks, determining the organization's risk appetite, policies and risk framework. The Risk Management department and the Supervisory Board's Audit & Risk Committee monitor to ensure adherence to these parameters.
The functioning of monitoring systems was also looked at. Ensuring that FMO is fully compliant with national and international rules and regulations, and that internal controls function correctly, is a major focus area of both the Management Board and the Supervisory Board.
When it comes to engaging with stakeholder the Supervisory Board members are also actively involved. For example, the chairman of the Supervisory Board holds annual meetings with the Dutch Ministry of Finance, and the Supervisory Board had two meetings in 2011 with the Dutch Ministry of Foreign Affairs/Development Cooperation.
As regards internal stakeholders, the Supervisory Board holds formal meetings twice a year with the FMO Works' Council. The Supervisory Board intends to work towards more structured interaction with FMO's management.