FRC guidance will benefit risk managers' careers

The bar has been raised for risk management. This was one of the resonating messages at an Airmic Live event on the recent guidance from the Financial Reporting Council (FRC).

Richard Sykes, partner at PWC, described the guidance as a "fundamental change" to best practice in corporate risk management. Executive boards will be required to have a far greater involvement in and understanding of risk than in the past and he advised risk managers to focus on helping their board members to join up risk management and corporate strategy, “such that the risk agenda becomes part of the DNA of the organisation from the top downwards”.

"This can only be good for risk managers' careers," he added.

Gillian Lees, head of research and development at CIMA said that communication will be key. "Risk managers will have a very important role in making sure their board has the necessary information." The nature of the information must be determined by the company's individual needs. But true for all risk managers, she said, is that they must present information that is relevant, analysed and aimed at building trust and confidence with stakeholders.

Peter Swabey, policy and research director at ICSA, the institute of chartered secretaries and administrators, agreed that there is no "one-size-fits-all" answer but that establishing how best to communicate with the board will be the key to success. He advised that the company secretary can have a pivotal role. "One of the key things for risk managers will be to make sure that the board is fully aware of these changes…In order to get things in front of your board, talk to your co sec and come up with a scheme for how you’re going to present it to the board.”

All agreed that there will be significant challenges for risk managers - not only ensuring a company's risk management is fully aligned from top to bottom, but also demonstrating it is embedded in corporate culture, something which is extremely hard to define.

Until now, the message that risk management should start with the board, Swabey said, “can get lost". Now, though, risk management will have a higher profile, and “this is a huge opportunity” for risk managers.

A recording of Airmic Live, FRC Guidance, can be downloaded on the Airmic website.