UK Corp Gov Code guidance making difference to boards and risk managers

Speaking at Airmic's ERM Forum in London last week, Richard Sermon, chair of The Chairman's Forum, said there is now a feeling among UK boards that they are proactively embracing risk management rather than reacting to events after they occur. He said this means risk managers are getting more airtime with the board and have a chance to deliver increased value. Mr Sermon explained that his comments are based on discussions between key stakeholders comprising The Chairman's Forum, Airmic, The Chartered Institute of Management Accountants (CIMA) and Alvarez & Marsal. Part of the discussions will inform a forthcoming report focused on the issues leaders need to achieve effective risk management and reporting. It will be underpinned by practical suggestions about how they might go about this task.hideThe FRC updated the Corporate Governance Code in September 2014 to stimulate discussion on risk and drive improvement in the amount and quality of risk management. Changes to the Code are focused on improving assessment and reporting of principal risks, evaluating longer term viability and monitoring the effectiveness of risk management and internal control systems. Mr Sermon said there is a definite feeling that the Code is moving things in the right direction when it comes to risk management. "The really good news is that there is a feeling that we are looking ahead of the game in terms of what the future might look like and how we can do things better, rather than simply responding to risks and closing the stable door too late in the day. There is genuinely a feeling within the FRC that this is part of what their flexible structure can accommodate," he said. "Their new guidance opens up potential for boards to manage risks better and the opportunity this represents for you particularly as risk managers is real," he added. However, adhering to the Code is not without challenges, Mr Sermon continued. The Code requires boards to consider what risk evaluation assessment methods they should use, how much information a company should provide, how a company integrates information into its annual report and over what period viability statements should be framed, he noted. Mr Sermon said there are several key messages from boards when it comes to risk management in the context of the revised Code. "There is the need for integration of reporting of information on risks and a whole management package that boards need to look at. Rather than looking at risk as a compliance issue to be managed from a series of silos, it is absolutely integral to business that it is seen in a different way and appreciated and understood in a different way," he told Airmic members. He said there is recognition by boards of the need to "promote more time to qualitative discussion on risk". "This is self-evident in the increasingly complex geopolitical environment in which we are operating. The FRC wants boards to give more considered and detailed thought to risk," said Mr Sermon. There is also an acknowledgement among board members that risk has too often been regarded as a part of routine compliance. "It is now clear that risk needs to be raised at a truly strategic level in corporate policy terms while simultaneously embedded in business practice," said Mr Sermon. There appears to be a growing understanding that risk is everyone's responsibility rather than the preserve of an individual risk manager. "Risk isn't something that somebody goes away and does in a corner, or something siloed in any particular part of the business. Risk is everybody's concern and everybody has a stake in it," said Mr Sermon. The apparent growing recognition of the importance of risk management being fed by the FRC Code means that risk managers are in a strong position to boost their role and help protect their organisations, he continued. "All of this means more airtime for risk management teams at board level and a need for the reporting of risk to be more consistently integrated into the management information flows," said Mr Sermon, in what will be music to risk managers' ears.

UK Corp Gov Code guidance making difference to boards and risk managers

Want to read this article?

Read Next

International SOS warns of ‘burnout epidemic’

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Alternative solutions and specialty drive Scor’s Q1 growth

AXA XL names new client and distribution officer in APAC and Europe

International SOS warns of ‘burnout epidemic’

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Alternative solutions and specialty drive Scor’s Q1 growth

AXA XL names new client and distribution officer in APAC and Europe

Want to read this article?

Read Next

International SOS warns of ‘burnout epidemic’

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Alternative solutions and specialty drive Scor’s Q1 growth

AXA XL names new client and distribution officer in APAC and Europe

Related Articles