ERM Frameworks and Responses to risk [5]

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Bullet points include: E.g. FRC “Effective Company Stewardship” (Sep 2011): narrative reports in financial statements should in future focus primarily on strategic risks rather than operational risks; and should disclose risks inherent in business models FRC “Boards and Risk” (Sep 2011) confirms / clarifies: Board’s overall responsibilities include firm’s approach to risk; but better risk decision-taking does not necessarily mean less risk, as risk-taking is essential to entrepreneurial activity Different board committee structures may be appropriate; but clarity between roles of Audit Committee, Risk Committee and overall Board is essential Boards need to agree appetite or tolerance for key individual risks and to understand firm’s exposure to risk and how this might change; focus on risks capable of undermining strategy or firm’s long term viability / reputation

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