Risk Management and Internal Control in the EU

Discussion Paper, March 2005

This discussion paper sets out the views of the Fédération des Experts Comptables Européens (FEE) – the representative body of the European accounting profession – on:

• The case for listed companies in Europe to exercise risk management and internal control in the interests of shareholders;
• How regulators in the EU and its Member States might encourage improvements in risk
management and internal control, without imposing disproportionate regulatory burdens.

FEE does not make presumptions about a need for increased regulation. Good risk management and internal control make business sense and businesses should not be subjected to regulatory intervention without good cause and a proper consideration of the costs and benefits. Moreover, if regulation is necessary, then disclosure of information should be the preferred regulatory tool because it puts power in the hands of shareholders and markets rather than leaving it entirely with regulators.

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