In control statement

FMO has internal risk management and control systems that enable us to take risks and control them and that are based on international best practices.

Adequate internal risk management and control systems support the attainment of objectives in the following categories:

  • Realization of strategic and business objectives;

  • Effectiveness and efficiency of processes;

  • Reliability of financial reporting; and

  • Compliance with laws and regulations.

The Management Board regularly considers the design and effectiveness of FMO’s internal risk management and control systems (taking into account the approved risk appetite) and discusses all related significant aspects with senior management. The results of the Management Board’s monitoring of FMO’s internal risk management and control system – including significant changes and planned major improvements – and the defined risk appetite are discussed with FMO’s Audit & Risk Committee, which reports these to the Supervisory Board.

Based on our monitoring of the company’s internal risk management and control systems, and cognizant of their inherent limitations described below, we have concluded that FMO is in compliance with the requirements of best practices 1.4.2 and 1.4.3 of the Dutch Corporate Governance Code. The Management Board makes the following statement:

As Management Board of FMO, we are accountable for internal risk management and control systems within FMO.

Based upon our assessment of the internal risk management and control systems of FMO and barring unforeseen adverse external and internal conditions, we are of the opinion that:

  1. The annual report provides sufficient insights into any failings in the effectiveness of the internal risk management and control systems;

  2. The afore mentioned systems provide reasonable assurance that the financial reporting does not contain any material inaccuracies;

  3. Based on the current state of affairs, as explained in the Financial Performance paragraph, it is justified that the financial reporting is prepared on a going concern basis; and

  4. The report states those material risks and uncertainties that are relevant to the expectation of the company’s continuity for the period of twelve months after the preparation of the report.

Reference is also made to the 'Risk management framework' section in the 'Corporate governance' chapter and the 'Risk management' section for an explanation on FMO’s risk management framework, which is organized in adherence to the three lines of defense principle.

We note that the proper design and implementation of internal risk management and control systems significantly reduces, but cannot fully eliminate, the possibility of poor judgment in decision-making, human error, control processes being deliberately circumvented by employees or others, management overriding controls, or the occurrence of unforeseeable circumstances.

Another limiting factor is the need to consider the relative costs and benefits of risk responses. Properly designed and implemented internal risk management and control systems will therefore provide reasonable, but not absolute, assurance that FMO will not be hindered in achieving its business objectives, or in the orderly and legitimate conduct of its business.

Regarding internal risk management and control systems the Management Board has identified the following areas of improvement. These are actively managed:

  • The extensive financial economic crime (FEC) program was successfully finalized at the end of 2021. To have a smooth transition to business as usual, continuous monitoring is needed in 2022 to ensure improvements in processes and systems identified during the last two years are embedded in the organization.

  • The on the ground monitoring of FMO’s portfolio has been impacted by travel restrictions due to COVID-19. This especially has an impact on the monitoring of ESG risks which requires increased focus going forward.

  • The monitoring and implementation of new and current regulations require significant management attention and resources. New and changed regulations are being monitored on different levels and will be consolidated under a newly established regulatory monitoring framework in 2022.

  • Data quality, process automation, reporting and systems support continue to require attention and efforts to further improve the accessibility, consistency, granularity of data and efficiency of processes throughout the organization.

  • As we all still face the consequences of the pandemic, much attention still needs to be given to the quality of interaction including the well-being of FMO staff.

Responsibility Statement

We have committed to ensuring, to the best of our abilities, that this report was prepared and is presented in accordance with the Integrated Reporting framework and that the integrity of all information presented can be assured. In accordance with article 5:25c sub 2 part c of the Dutch Financial Supervision Act (Wft), we state that, to the best of our knowledge:

  • The annual accounts give a true and fair view of the assets, liabilities, financial position and profits of FMO and its consolidated companies;

  • The annual report gives a true and fair view of the position on the balance sheet date and developments during the 2021 financial year of FMO and its consolidated companies; and

  • The annual report describes the material risks that FMO faces.

The Hague, March 16, 2022

Fatoumata Bouaré, Chief Risk & Finance Officer
Michael Jongeneel, Chief Executive Officer
Huib-Jan de Ruijter
, Chief Investment Officer