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Introduction to Risk Management

Since FMO’s strategy and activities are targeted at maximizing development impact while remaining profitable in a sustainable way, taking risks is inherent to our core business. In doing sustainable, profitable business, however, our challenge lies in taking calculated risks. FMO’s Management Board defines the risk profile and risk appetite under the supervision of the Audit & Risk Committee and the Supervisory Board. Within our risk appetite, FMO has a comprehensive, integrated In Control Framework that enables us to take and control these calculated risks.

This In Control Framework plays an integral role in the thorough analysis of risks. FMO identifies risks in the following categories: strategic, operational, financial and compliance. Important drivers in our risk universe are FMO’s strategy, goals or objectives, stakeholder expectations and an increasing number of national and international laws and regulations. For these risks we have implemented controls whose effectiveness we continuously monitor. Within FMO this monitoring is conducted by three groups, or ‘lines of defense’. Business management executes and reviews process controls and performs self-assessments. In the second line of defense there are specialized risk departments and committees, which review and advise. The third line consists of the internal audit function and external auditors.

In 2012 we paid special attention to a number of key risks, based on the market situation, regulations or internal circumstances.