The Financial Reporting Council's latest guidance on the reporting of important risks has now been published. In a nutshell, boards are required to report 'principal risks' that have their origins in 'behaviour or organisation', what we call behavioural and organisational risks. This new recommendation effectively recognises our conclusion, that there is a hole in the 'Three Lines of Defence' doctrine that underlies most current risk analysis and reporting.
Behavioural and organisational risks are important causes of
reputational damage and of many better-recognised risks. However, boards
cannot properly report on 'principal risks' until they have
systematically identified and evaluated both the range of behavioural
and organisational risks at work in the company and the extent to which
they may give rise to principal risks including reputational hazard.
We have written about the practical implications for boards, chairmen and company secretaries, for Governance, the authoritative publication on international corporate governance.
You can find our article here.
Anthony Fitzsimmons is Chairman of Reputability LLP and,
with the late Derek Atkins, author of “Rethinking Reputational Risk: How to Manage the Risks that can Ruin YourBusiness, Your Reputation and You”
- This blog carries a series of posts and articles, mostly written by Anthony Fitzsimmons under the aegis of Reputability LLP, a business that is no longer trading as such. Anthony is a thought leader in reputational risk and its root causes, behavioural, organisational and leadership risk. His book 'Rethinking Reputational Risk' was widely acclaimed. Led by Anthony, Reputability helped business leaders to find, understand and deal with these widespread but hidden risks that regularly cause reputational disasters. You can contact Anthony via anthony.fitzsimmons At cranfield dot ac dot uk