Approaching risk management effectively and tactfully is an essential skill for any NED; with the upcoming NED Debate looking at how boards struggle to identify and manage risk, this spotlight on the NED Handbook signposts a key chance to explore the topic in more depth.
This year’s annual NED Debate will bring together non-executive directors, c-suite executives, and industry experts from around the country to debate the motion, ‘This House believes boards struggle to identify and manage risk’.
The governance responsibility for risk management systems is a crucial element to any board of directors. Recognised in the UK Corporate Governance Code, companies should have a structured framework for managing risk, and the directors should satisfy themselves that this framework is suitable and adequate. Arguably though, we still see many instances of poor corporate governance with boards overlooking the very risks to which they should be applying oversight.
With the September debate on the horizon, it’s the perfect time for NEDs to delve into processes surrounding risk management with a more detailed and critical eye. The Non-Executive Directors’ Handbook is well-worth spotlighting as a practical guide to do so.
The handbook’s chapter on Risk Management and Internal Control addresses the framework and guidance for managing risks within a business, including regulatory guidelines such as the UK Code and FRC Guidance. As well as covering the primary business and operating risks, it looks at the internal audit function, whistleblowing procedures, and risk and audit committees, delivering a comprehensive study of risk for NEDs at any stage of their professional development.
In particular, the publication features a checklist of questions, provided by the FRC, for NEDs to consider the issues at hand. For example, covering risk appetite and culture:
- How has the board agreed with the company’s risk appetite? With whom did it confer?
- How has the board assessed the company’s culture? How does it satisfy itself that the company has a ‘speak-up’ culture, in which it systematically learns from past mistakes?
- How has the board considered whether senior management promote the desired risk awareness culture and demonstrate their commitment to risk management and internal control?
- How is inappropriate behaviour dealt with? Does this create consequential risks?
- How does the board ensure that it has sufficient time to consider risk?
Thinking about some of these questions in more depth is a useful exercise for any NED’s personal development, and is especially enlightening in light of the debate. For further information on these sorts of topics, check out the full NED handbook in the NEDA membership suite, and join the NED Debate 2024 for a critical discussion on such an essential issue.
Learn More
Follow the link here to view the Non-Executive Directors' Handbook (Premium membership required).
https://www.nedaglobal.com/individuals/ned-handbook/
NED Debate 2024 Host and Sponsors
The debate will be hosted by WTW and NEDA on the 11th of September 2024, in association with Alumni Global, EQ, CMS, BDO and Board Agenda.
Follow the link here to read more and reserve your place at the NED Debate 2024.
https://www.nedaglobal.com/events/the-ned-debate-2024/
.jpg)
.jpg)