Annual Report 2011 - Analist.be

Corporate governance statementRisk related to investments1. Indirect risk on investmentsEvery significant investment in a listed company held by GBLis exposed to specific risks that may have an impact on GBL.These are described and analysed in their respective activityreports and registration documents in accordance withlegislation in force. The possible materialisation of these risksin one or more investments may lead to a change in the overallvalue of the GBL portfolio.GBL is also exposed to risks concerning its private equityinvestments, which nevertheless account for less than 3% ofits adjusted net assets at present.Risks specific to GBL2. Strategic riskThe composition of the portfolio, determined by the investmentdecisions, implies a particular exposure to certain industrialsectors, certain geographical areas or certain regulations.3. Reputation riskGBL’s historic performance, its investment policy, its conductas a shareholder, and its approach to ethics and governancecontribute to the group’s renown. Safeguarding this soundreputation is essential.4. Market riskGBL is exposed, given the nature of its activities, to stockmarket fluctuations on its portfolio.5. Interest rate riskGBL is exposed, given its financial situation, to interest ratedevelopments. Evolving interest rates also have macroeconomicimplications on both its debt and its cash.6. Exchange riskThe transactions carried out by GBL are primarily denominatedin euros. The group’s value can nevertheless be impacted byexchange rates through investments making up its portfolio.7. Counterparty default riskCounterparty default risk occurs within the framework ofdeposit, hedge, stock market purchase/sale transactions orother transactions with banks or financial intermediaries.8. Credit riskSince GBL has no commercial activity, this risk primarilyconcerns the financial intermediaries with which GBL hasmade short-term cash investments.9. Liquidity riskGBL must at all times have sufficient financial capacity to meetits obligations, whether to finance investments or to honourmaturing debts.10. Risk on derivativesDerivatives can result in both a counterparty default risk andan economic effect related to call and put options whose valuewill evolve with market conditions.11. Collateral riskCollateral implies a counterparty default risk, a contractualrisk and a potential economic loss related to the release of thecollateral.12. Risk on delegation of powersNon-respect for powers of signature could engage GBL intransactions it has not authorised.13. Risk of fraudCollective or individual fraud by GBL staff could lead to afinancial loss or an unauthorised leak of information, whichwould undermine the group’s image.14. Legal riskContractual discipline is essential for protecting the group’sassets and ensuring the success of its policies. It is generalin scope and particularly important in the case of agreementsconcerning financing, acquisition or sale transactions, etc.GBL must also keep control over litigation with which it may beconfronted in the context of its own activities, in order to limitthe financial loss that could result.15. Planning/budgeting riskBudgets and projections are important instruments fordecision-making and management control. Their reliability andrelevance can influence the Company’s performance.16. Risk related to financial statements (management information,registration of transactions in the accounts, consolidation)The production of complete, reliable and relevant information isan essential element of management and governance.17. Risk on cash transactionsAny loss of control on cash input, output and trading securitiescan have negative financial consequences for the Company.18. Risk related to human resourcesThis concerns the Company’s capacity to find and retain thehuman capital required to ensure that it operates effectivelyand achieves its objectives.19. Information technology riskThis risk occurs at the level of the general informationtechnology environment, the data backup system and the useof and access to software.20. Tax riskThis risk is related to an unexpected evolution of taxation.These risks have been ranked on the basis of impact andoccurrence criteria and in terms of the obligations resultingfrom IFRS 7.144 Annual Report 2011