THE IMPLICATIONS OF LAST YEAR’S UPDATES TO THE FRC’S CORPORATE GOVERNANCE CODE WITH REGARD TO BOARD-LEVEL RESPONSIBILITIES FOR RISK MANAGEMENT
In October 2015, the Financial Reporting Council (FRC) published its latest changes to the UK Corporate Governance Code. Geared towards ensuring that UK-based businesses identify and manage risk properly, the code affects all those listed on the London Stock Exchange (LSE). But a year on from the publication of this new code, are businesses taking it seriously and what can they do to demonstrate that the measures they have in place are both appropriate and effective?
There’s no doubt that risk management has become a primary consideration in terms of meeting corporate governance objectives over recent years. Increasingly, investors and regulators expect business leaders to be able to identify the principal risks to the business, to articulate how these risks are measured and managed, and to explain how their strategy fits with the organisation’s culture and appetite for risk.
Adding value is fundamental to business success, but any attempt to create value also brings the risk of miscalculation and this is where many businesses fail. Failure happens as a result of either an inability to understand the risks that they face or an inability to manage these risks correctly. Put like this, it’s evident that effective risk management is the key to long-term success. Yet businesses have to confront the same challenge the world over. Continuous change combined with new technology, new markets and greater competition has increased both the rate at which these threats emerge and their potential impact.
Apr-Jun 2016 Issue