ICSA Guernsey 2016 conference presentation slides

1. The ICSA Guernsey Conference 2016

2. Introduction
Sara Bourne FCIS, Chair, ICSA Guernsey Branch

3. Opening address
Sir Richard Collas, Bailiff and Acting Lieutenant
Governor, Bailiwick of Guernsey

4. Governance and the regulatory
challenge
Emma Bailey, Director, Investment Supervision
and Policy Division, Guernsey Financial Services
Commission

5. Governance and the Regulatory
Challenge
Emma Bailey, Director
Investment Supervision and Policy Division
27 April 2016

6. April 26, 2016 Guernsey Financial Services Commission 6
Governance and the Regulatory Challenge
What is the Commission’s approach to
reviewing Governance?
Governance themes identified by the
Commission during its reviews.

7. April 26, 2016 Guernsey Financial Services Commission 7
Governance and the Regulatory Challenge
What is the Commission’s approach to
reviewing or Challenging Governance?

8. April 26, 2016 Guernsey Financial Services Commission 8
Governance and the Regulatory Challenge
Code of Corporate Governance –
introduced on 30th September 2011.
Recently updated to include an appendix
containing principles applicable to
Licensed Insurers.

9. Copyright of Guernsey Financial Services Commission 9
PRISM - Probability Risk – Governance
Strategy /
Business
Model Risk
Governance
Risk
Conduct
Risk
Operational
Risk
Financial
Crime Risk
Credit
Risk
Market
Risk
Capital
Risk
Liquidity
Risk
Insurance
Risk
Environmental
Risk

10. April 26, 2016 Guernsey Financial Services Commission 10
Governance and the Regulatory Challenge
February 2016 - the Commission
published a Guide to Risk Based
Supervision in Guernsey.

11. April 26, 2016 Guernsey Financial Services Commission 11
Governance and the Regulatory Challenge
Governance: Supervisors seek an
understanding of how the firm is governed.
Good Corporate Governance acts as a control
mechanism providing confidence to
stakeholders that the institution is managed in a
sound and prudent manner. Supervision looks
at the governance structure, the quality of the
individuals and how the structures operate in
practice.

12. April 26, 2016 Guernsey Financial Services Commission 12
Governance and the Regulatory Challenge
Governance themes identified by the
Commission during 2016:
39 Risk Mitigation Programme Action
Points across 25 firms.

13. April 26, 2016 Guernsey Financial Services Commission 13
Governance and the Regulatory Challenge
Recent Governance themes identified by
the Commission:
• No formal succession plans
• Insufficiently trained and knowledgeable
boards
• Not carrying out corporate governance
self-assessments

14. April 26, 2016 Guernsey Financial Services Commission 14
Governance and the Regulatory Challenge
Recent Governance themes identified by
the Commission:
• Insufficient MI to the board
– particularly in regard of actions arising from
risk reviews and gaps in compliance reporting
• MLRO /Compliance officer being board
members
– but size and complexity of firm warrants
independence (non-board)

15. April 26, 2016 Guernsey Financial Services Commission 15
Governance and the Regulatory Challenge
Commission’s own Risk Governance
Training – Putting ourselves in your
shoes

16. Copyright of Guernsey Financial Services Commission 16
PRISM - Probability Risk – Information
Security
Strategy /
Business
Model Risk
Governance
Risk
Conduct
Risk
Operational
Risk
Financial
Crime Risk
Credit
Risk
Market
Risk
Capital
Risk
Liquidity
Risk
Insurance
Risk
Environmental
Risk

17. Guernsey Financial Services Commission 17
GFSC Information Security
Observations
- Individual error
- Failure to follow policies and procedures
- Lack of Board awareness
- Inconsistent response rates

18. GFSC expectations
The Commission wishes to impress on firms the need for them to ensure
that they take their responsibilities in respect of cyber security, seriously.
Firms are reminded of their obligation to keep the Commission informed
of matters involving financial crime and other serious operational
problems. Any serious or significant incident involving data loss,
financial loss or denial of service type attacks, whether actual or
prevented, should be reported to the Commission in a timely manner.
The ability for firms to provide a secure and uninterrupted service should
form an important part of their operational risk considerations. The
increasing frequency and sophistication of cyber-attacks means that this is
something which requires constant monitoring. Firms not only need to
build defensive resilience to such attacks but also need to have the
capability to recover quickly from the impact of a successful breach.
Guernsey Financial Services Commission 18

19. GFSC Core Information Security
Message
• Plan
• Prepare
• Notify
Guernsey Financial Services Commission 19

20. Our people are our best assets
Mark Wearden FCIS, Director, MBS Challenge
Perception and Senior Lecturer, University of
Lincoln

21. Tea / Coffee Break

22. Cyber crime: taking stock
Matthew Parker, Head of Information Security -
Mourant Ozannes

23. IP rights as an aspect of
governance
Alan Bougourd, Registrar, Guernsey Registry

24. Do you recognise the value of the IP
in your business?
My predecessor John Ogier has recently published an
Article for the World Intellectual Property Office.
He notes that up to the 1980’s tangible assets accounted for
80% of company value. The reverse is now true with 80%
made up of intangibles.
• Can you recognise this in your business?
• Are you protecting and maximising the value?
http://www.wipo.int/wipo_magazine/en/2016/01/article_0002.ht
ml

25. Do others recognise the value of IP
in your business?
Administrators often extract the true value of IP out of a company that has
been under-valued prior to the administration.
There is talk of a “class action” law suit against a Board of Directors for negligence
in IP management.
• Will you as a Board Member be held liable for de-valuing a Brand through
mismanagement?
• Do managers deliberately under-value IP ahead of a buy-out?

26. Has your business ever undertaken an
audit of your intellectual property?
There are Tools Available.
A good resource is the UK Intellectual Property Office.
• They offer a free IP Health Check.
• They run an IP Master Class which is comprehensive and cost effective.
• They have a resource rich web-site.
• Wealth Warning- There are legislative differences between the UK and
Guernsey IP Regimes (particularly around dispute resolution), but it is a very useful
guide.

27. What have you considered
protecting?
There are a number of registerable and un-registerable
rights.
Some are more obvious than others.
• 94% of companies recognise that there is value in IP but
only 54% do anything to protect it.
• We often comment on how many firms have not protected
their brands though Trademark Registration – it’s relatively
simple – although you might want to take advice, particularly
in respect of Nice Classes.
• Image Rights can be complimentary to Trademark
protection.
• Design Rights seem to be particularly under-utilised.

28. Are your staff giving your rights
and value away?
Does your firm have an IP Culture?
Do you need to change the culture of your organisation, so
staff appreciate the value that is potentially being given away?
• You have regular AML / CFT, Health and Safety training –
What About IP?
• Does IP form part of your induction?
• The UK IPO On-Line Masterclass is easily accessible.
• Do your employment contracts make it clear who owns the
IP being developed by your staff - in and out of work time?

29. Do you work collaboratively?
One of Guernsey’s strengths is the collaborative working
environment.
But Who Owns The IP?
• I can understand why you wouldn’t produce a prenuptial
agreement on a first date but all parties need to understand
who owns the IP in a collaborative working environment.
• Early Non-Disclosure Agreements etc. are vital.

30. How easy is it to enforce your
rights?
“The system works but it’s expensive and challenging”.
That is a quote from a business that has had to enforce its
design rights to protect its market.
• A simple case can cost upwards of £1m.
• Insurance is available and this can even be post
infringement – but the later you leave it the more expensive
it becomes.
• Remember – insurance does not protect you against
negligence!
• Protecting your IP is a risk reward decision but having your
IP protected can incentivise investors and increase the sale
value of your business.

31. Asserting rights in an e-
environment?
Successful products are copied within 12 months.
Software analyses the most successful sales on amazon and
e-bay and the commercial information is available to all.
• You can register your registered design rights with e-bay and
they will remove infringing sellers.

32. How easy is it to exploit your IP?
“I’ve got an idea but don’t know how to develop it”.
Outsource
• Consider working with a university, sponsor the CFE,
standard agreements can be put in place with academic
bodies to develop your idea.
• As soon as a product is in the public domain it loses
patentability.
“I’ve got a product but can’t get it to market”.
• Licensing can be a way to ensure you maximise the value of
IP, but try to get a NDA in place.

33. Do you want to recoup some of the
cost of attending today?
Discount of £100 on One Trademark in One Nice Class.

34. What opportunities might there be
for you from Guernsey developing
its International IP capability?
IP Rights are generally jurisdictional.
• Extension of the Berne Convention to the Bailiwick ensures
that any literary and artistic work that originates on the Island
receives copyright protection in all of the member countries.
• Our next priority is Paris – This will enable the date of
registration in Guernsey to be used as the priority date,
within 6 months, on Trademark applications in member
jurisdictions.
• We will then look to extend the Madrid Protocol which
provides wider coverage across participating states.
• Legal jurisdiction in contracts (Singapore).

35. Todays Take-Away!
I’d sum up what you need to do in 3 words:
• Identify
• Protect
• Exploit
And if the Registry can offer any help whatsoever please do
get in touch!

36. Any Questions?
IP
Registry

37. Leading the way on CSR
Susie Crowder, Non-Executive Director, UBS and
C5

38. Corporate
Social
Responsibility
By Susie Crowder

39. A Traditional Definition of
CSR …
 Corporate social responsibility is a
ambiguous concept and definitions
tend to vary. The European
Commission defines it as:
”a concept whereby
companies integrate social
and environmental concerns
in their business operations
and in their interaction with
their stakeholders on a
voluntary basis”

40. A Modern Day Approach To
CSR …
 “CSR goes beyond philanthropy and
compliance and addresses how companies
manage their economic, social, and
environmental impacts, as well as their
relationships in all key spheres of influence:
the workplace, the marketplace, the supply
chain, the community, and the public policy
realm.”

41. The Role Of The Board and
CSR …
 Studies, largely conducted in the US and
Canada, have found that most Boards do
not have a committee or dedicated Director
with responsibility for CSR.
 Those that do consider it a corporate
governance matter.
 Lack of oversight at Board level.
 Lack of focused engagement.

42. One Side Of The Debate …
 Businesses are owned by their
shareholders - money spent on CSR by
managers is theft of the rightful property of
the owners
 This is the voice of the laisser-faire 1980s, still
being given powerful voice by advocates such
as Elaine Sternberg. Sternberg argues that
there is a human rights case against CSR,
which is that a stakeholder approach to
management deprives shareholders of their
property rights.
 She states that the objectives sought by
conventional views of social responsibility are
absurd. Not all aspects of CSR are guilty of
this, however. Sternberg states that ordinary
decency, honesty and fairness should be
expected of any corporation.

43. One Side Of The Debate …
 Larry Summers, the former U.S. Treasury
Secretary, and a colleague of Porter’s at
Harvard, was overheard at the World
Economic Forum meeting in Davos, asking
incredulously: “Do you believe this
[expletive]?”
 Summer’s offhand comment captured the
core argument at the root of corporate global
governance efforts.
 There is a wide chasm between those who
believe that corporate social responsibility
and sustainability are integral to company
profits and growth, and those who believe
such efforts are public relations at best and
a distraction from core activities at worst.

44. One Side Of The Debate …
 Peter Gampel, the Director of business
valuation at the accounting firm Fiske &
Company noted that a company’s value is
based on its tangible assets – such as it
cash holdings, property and buildings – as
well as its intangible assets.
 “If there is a merger, we are brought into put
a value on intangibles,” he said. “There are
dollar amounts for patents, licenses,
customer relationships, trademarks, but we
don’t usually try to assess the value of a
company’s social responsibility. This is not
quantifiable from a numbers point of view. It
often does not carry that much weight, if any,
in a negotiation”.

45. The Other Side of The Debate
…
 Harvard Business School Professor Michael
Porter – the king of business gurus – put
forward a radical proposition to global
corporations.
 “Businesses must reconnect company success
with social progress,” he wrote in the Harvard
Business Review. “Shared value is not social
responsibility, philanthropy, or even
sustainability, but a new way to achieve
economic success. It is not on the margin of
what companies do but at the centre.”
 “We believe that it can give rise to the next
major transformation of business thinking,” he
boldly pronounced.

46. And So The Debate Goes On…
 Leaders who do not speak the new language may
soon find themselves ‘left behind.’ In the words of
Peter Bakker, Head of the World Business Council
for Sustainable Development:
“businesses cannot succeed in societies
that fail. Societies cannot succeed if
business fails”.
 Digesting the details of this, in the context of your
business and operating environment/jurisdiction, and
coming to the right conclusion one of the more
complex tasks of today’s Board members.

47. Concluding Thoughts …

48. Closing address: ICSA 125
Simon Osborne FCIS, Chief Executive, ICSA

49. 125 years of leading governance
ICSA 125
This October we celebrate 125 years since the institute first was first formed.
• 1891: the Institute of Secretaries
• 1971: the Institute of Chartered Secretaries and Administrators
• 2016: ICSA: The Governance Institute

50. 125 years of leading governance
• Positioning ourselves for the future
• ICSA: The Governance Institute
• Royal Charter to lead ‘effective governance and efficient administration of
commerce, industry and public affairs’

51. 125 years of leading governance
Where we’re heading:
• ICSA to be the provider of products and services to support the skills and
knowledge of professionals working in governance and legal and regulatory
compliance roles in organisations of all types and sizes and in any sector
• A wider set of products and services, particularly qualifications, for people outside
of the corporate market
• Revision of qualifications to keep them current and in demand
• Higher public profile in the media

52. 125 years of leading governance
How we’re getting there:
• Continued focus on raising our public profile
• Increased public profile courtesy of the Policy team, ie Code of Governance for
CCGs, blogs, technical briefings, articles, speaking at events and responding to
consultations
• Positioning ICSA as a thought leader in national and regional media
• Governance and Compliance magazine
• Research projects
• www.icsa.org.uk

53. 125 years of leading governance
Governance professionals are right at the heart of things, promoting accountability,
transparency, integrity and stewardship to ensure that organisations operate in a
manner which is most productive.
‘Governance focus has increased, the company secretary’s role has increased,
[there is] more work to do, and that work is more visible.’ (The Company Secretary:
Building trust through governance, Henley Business School)
The study, development and practice of governance are here to stay.
ICSA: The Governance Institute has a bright future ahead of it!