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Listed French companies improve risk communication

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PARIS—France's leading companies have significantly improved shareholder communication on risks in the last five years, but still have plenty of room for improvement, according to a report by Aon France, part of Chicago-based Aon Corp.In 2005, "Companies strove to identify risks specific to their activities and their context, allowing shareholders to better understand their particularities," said the report, "Communiquer sur ses risques: analyse des pratiques des 100 sociétés françaises cotées," based on a joint study by Aon France's risk management branch and Euronext.

The study examined risk reporting in market reference documents filed in 2005 by 100 companies listed on the SBF-250, including 28 on the CAC 40, and others from the Small 90, Next 20, and MID 100.

While finding increased maturity in risk reporting, the report said that some 52% of the companies had only updated statistics from previous years, without doing fresh risk analysis. "This has the unfortunate effect of diluting the utility of this risk information for shareholders."

In a bid to improve comparability of risk information delivered to shareholders, in 2001 the French market authority, the Autorité des Marchés Financiers, requested that listed companies include a chapter on risk factors in their market reference documents.

In 2003 and 2004, the AMF issued recommendations on specific areas to address in the risk chapters, including financial risks, legal risks, industrial risks linked to the environment, insurance and coverage of risks, and other risks.The study, the third annual edition, found that some 97% of the companies examined had covered the general theme of risk in their reports, while 85% had included dedicated chapters about risks faced by the company. However, only 48% had covered all of the AMF's recommended areas.