Business Risk Governance

[Yakub02]

Risk governance Good risk reports would include the following:

 a description of risk governance arrangements;

 a description of how emerging risks are being managed.

Situation in the UK The UK Corporate Governance Code requires the board of directors to maintain a sound system of risk management, to carry out a review of effectiveness of the risk management system at least once each year and report to shareholders that the system is effective.

The UK Corporate Governance Code requires companies listed on the London Stock Exchange to report their risk management activities.

All companies listed on the London Stock Exchange publish a list of significant risk factors with explanation of why they are deemed to be significant and the steps taken to mitigate the risk. Typically, good reports would satisfy all of the requirements in the previous section


Financial summaries Financial statements contain a great deal of detail. Public companies often publish summaries of key figures from the financial statements as an aid to users. Good practice would require that figures in the financial summaries should be referenced back to the financial statements.

Financial summaries are useful to provide an overview of financial performance and financial position but a true understanding can only come from a detailed analysis of the financial statements in the light of knowledge of the industry within which the company operates.

 

[Yakub02]

‘While there is no single, commonly-accepted definition of corporate social responsibility …

it generally refers to business decision-making linked to ethical values, compliance with legal requirements, and respect for people, communities and the environment’ (Business for Social Responsibility).

An important element of CSR is that it goes beyond compliance with legal and regulatory obligations, and involves voluntary initiatives and investment in people.

and the environment, and better relations with all stakeholders, not just shareholders and other investors. The practice of CSR increases the transparency and accountability of an organisation.

Transparency is important as stakeholders want to know about an organisation’s activities.

(They want to ‘see into’ an entity, to understand what it is doing and which strategic directions it is taking.) For example, if a local community believe that a company is dumping waste in the local area, then it will be important to understand what is actually happening.

 

[Yakub02]

and the environment, and better relations with all stakeholders, not just shareholders and other investors.

The practice of CSR increases the transparency and accountability of an organisation.

Transparency is important as stakeholders want to know about an organisation’s activities. (They want to ‘see into’ an entity, to understand what it is doing and which strategic directions it is taking.)

For example, if a local community believe that a company is dumping waste in the local area, then it will be important to understand what is actually happening.

There is now growing recognition of the need to provide social and environmental information as quantified performance measurements, so that actual achievements can be assessed better against targets or benchmarks.

 

[Holicent]

Business risk governance refers to the system of policies, procedures, and practices put in place to identify, assess, and manage risks in a business. It involves creating a framework for decision-making and ensuring that risks are managed effectively throughout the organization. Effective risk governance helps businesses to operate with greater confidence, transparency, and accountability, while also reducing the likelihood of negative outcomes such as financial loss, legal liabilities, and reputational damage.

By establishing clear lines of communication and accountability, and by involving all stakeholders in the risk management process, businesses can create a culture of risk awareness and responsiveness that enhances their overall resilience and success.

 

[Ramolak19]

Business risk governance refers to the process of identifying, assessing, and managing risks faced by a business. It involves establishing policies and procedures to ensure that risks are identified and addressed appropriately.
The goal of business risk governance is to minimize the impact of potential risks on the organization and its operations. This includes identifying internal and external risks, such as financial risks, legal and regulatory risks, and operational risks.

Effective business risk governance involves collaboration between different departments and stakeholders, including senior management, legal, compliance, and risk management teams. It also involves regular monitoring and reporting to ensure that risks are being managed effectively and that the organization is prepared to respond to potential threats. By implementing strong business risk governance practices, organizations can mitigate risks, protect their reputation, and ensure long-term success.