Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • November 2013
11

FRC consults on new risk management standards

Open-access content Wednesday 6th November 2013 — updated 4.14pm, Monday 4th May 2020

The Financial Reporting Council is considering changes to the risk management and reporting aspects of the corporate governance code imposed on listed companies and auditors

The watchdog today issued a consultation proposing new guidance aimed at raising risk management standards. Supplementary guidance for directors of all banks was also issued.

Melanie McLaren, the FRC codes and standards executive director, said: 'The new guidance and the proposed changes to the code, highlight the issues that boards need to consider when assessing and managing risk, crucially including risks to solvency and liquidity.

'We have placed considerable emphasis on the need for robust assessment by boards and on the important role of auditors in ensuring reliable communication to investors.'

She said that risk management was one of the most important responsibilities of a company's board. Understanding the principal risks facing the company is essential for the development of strategic objectives and the ability to seize new opportunities.

'For investors, as providers of risk capital, knowing how the board is managing and mitigating risks is an important indicator when judging whether the company will be able to deliver the value that investors seek,' added McLaren.

Commenting on the consultation, David Hare, president of the Institute and Faculty of Actuaries, said actuaries would play a key role in helping companies and auditors to implement these new requirements.

'Few professionals have the technical knowledge and judgement required to undertake the modelling that these new rules demand.

'With an October 2014 application date, the timeline to implement these activities is challenging to say the least and access to established expertise in the modelling of financial uncertainty and risk will be vital.'

Hare added: 'If you are responsible for the accounts, running or ownership of a listed company, then today's announcement by FRC will affect you.'

He said the new rules would require companies to undertake robust risk assessments, often backed up by scenario modelling, and for auditors to be able to investigate and challenge the work done to evidence these. 

At Hymans Robertson, head of enterprise risk management Vijay Krishnaswamy said the implementation of these recommendations was not a small task.

'But many audit firms will adopt the recommendations rapidly as a matter of good practice for encouraging sound auditing.

'It's likely that auditors will need to apply actuarial techniques, outside their usual skill set, in order to comply. In our own work with leading financial institutions, the task of embedding risk management within a business has not been straightforward as there are both technical and cultural difficulties to be overcome and the scale of the challenge facing UK plc is sizeable.'

Krishnaswamy added: 'The upside is that, done well risk management, can add real value for investors, while giving other stakeholders greater confidence in long term corporate performance.'

The consultation closes on January 24 2014.

This article appeared in our November 2013 issue of The Actuary.
Click here to view this issue
Filed in
11
Topics
Regulation Standards

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

New Fast-Growing Team - Actuarial Systems Development

London (Greater)
Excellent Salary Package
Reference
143762

Actuarial Pension Consultant – Scotland/Remote – Up to £90,000 plus bonus

Edinburgh / Glasgow / Remote working
Up to £90,000 + Bonus
Reference
143761

Part Qualified Pensions Actuary– Specialised Pensions Consultancy - Scotland/Remote - Up to £70,000

Edinburgh / Glasgow / Remote working
Up to £70,000 + Bonus
Reference
143760
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ