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The lesson learned from the financial crisis has generated a long needed process of reform of national, European and global financial regulation. This reform process with its focus on supervision of institutions and regulation of markets is extremely important to ensure financial stability and a well-functioning market serving the real economy and not the other way around.

However, perhaps even more important is the focus on corporate governance and risk management in financial institutions to encourage the building of sound and risk conscious corporate cultures in financial institutions, one that involves all stakeholders including trade unions.

UNI Europa Finance therefore welcomes the Commission’s Green Paper on corporate governance and risk management launched by the European Commission this summer. The Green Paper provides a useful analysis of the problem as well as a number of proposals for improvement.

Key issues addressed in the Green Paper are:

- Establishing a sound risk culture

- Better involvement of stakeholders

- More diversity on boards and strengthening competence of board members

- Better internal information flow for risk assessments

- Ensuring long-term sustainable remuneration policies

- Limiting conflicts of interest

UNI Europa Finance commented on the Green Paper in the public consultation over the summer. UNI Europa FInance suggests a better involvement of stakeholders in risk management and in particular employees working in the company

Employees in companies are obviously stakeholders with a long-term interest in the company and furthermore with essential knowledge about the functioning of the company.

Employees have a special knowledge and experience about how daily practices can impact on risk. In practice, policies are not always implemented the way managers think they are, and the employees can contribute to providing a more complete picture of the company’s risk profile.

For this reason, employees in financial institutions should always be involved in the risk management of their company. As suggested below in comments to the individual parts of the Green Paper, this could be in the form of employee representation on boards and particularly the boards’ risk committees, as well as established structures to canalise information from employees to supervisory authorities and the company’s Chief Risk Officer and other risk-related functions.

Furthermore, for an effective implementation of risk policies in companies, a close cooperation and dialogue with the employees is necessary. Sound risk policies have no value if they are not properly implemented and the implementation is not continuously monitored and adjusted in cooperation with the employees and their unions.

The contribution to the consultation by UNI Europa Finance is enclosed in related files together with the Commission Green Paper.

More information furthermore on the Commission web site:

http://ec.europa.eu/internal_market/company/modern/corporate_governance_in_financial_institutions_en.htm