On 1 September 2011, the Financial Reporting Council (FRC) published a report 'Boards and risk: A summary of discussions with companies, investors and advisers', which summarises views of companies, investors and advisers about how companies are reporting about risk. This follows on from the recent revision of the UK Corporate Code, which highlights boards being responsible determining the nature of risks, risk management and internal controls.
The main conclusions the FRC noted in the summary of views are:
There has been change in how board's focus on risk in recent years.
The Turnbull guidance is considered to be an effective framework for companies, but that some change is needed to it to reflect recent revisions to the UK Corporate Governance Code, which emphasis the board's role in risk management. The FRC will carry out a limited review in 2012.
- How boards approach and manage risk is developing and so the FRC has shared this in the report to reflect and contribute to best practice.
The report arises from a number of meetings the FRC held earlier in the year with various stakeholders. The Quoted Companies Alliance organised a meeting with the FRC of small and mid-cap quoted company directors that contributed to the research for this report.
The FRC notes that this is not guidance, but instead is an attempt to capture the views of companies, investors and advisers and to share them with other companies which may be thinking about their own approaches to risk.