Corporate governance: ICSA and AIRMIC research into corporate risk reporting

The Institute of Chartered Secretaries and Administrators (“ICSA”) and AIRMIC (an association supporting those responsible for risk management and insurance within their own companies, and whose membership includes two thirds of the FTSE 100) have published a joint report which sets out the findings of their research into risk management and disclosure.

The research involved a review of the most recent annual report and accounts of selected FTSE350 companies across eight different sectors.  The purpose of this review was to evaluate the risk reporting standards achieved by the selected companies as an indication of the quality of their risk management activities.

The research revealed a wide disparity in the quality of risk reporting.  It found that, whilst firms in the leisure industry have a generally high standard of risk reporting, most of those in sectors such as food and drink are uninformative.  Chemical and pharmaceuticals and mining and energy were two other industries that, although high-risk, were not generally of a high standard.  The report also noted that, overall, many companies treat risk management as a standalone activity in their reporting, instead of describing it in the context of the wider corporate strategy.

The report also highlights the benefits associated with good risk management disclosure, which include enhanced shareholder confidence, and identifies five key areas which should be addressed to achieve successful management of risk.

The report is available here.

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