It showed of 100 of the UK’s biggest PLCs highlighted the changing attitudes in company boardrooms to risk management and the strategic plans implemented since the report.
UK companies have stood up and taken note of the Turnbull Report of October 1999. In response to the inquiry, which highlighted the multiple risks facing a company in conducting its business, risk management has become an important item on the agenda of company board meetings.
A study conducted by Hermes Credit Services has found that 80% of PLC boards have taken on the responsibility of developing a strategic risk management plan and implementing it, themselves. In addition, corporate governance has been seen as an important factor in maintaining risk management discipline including the effective management of credit insurance.
Of the companies included in the survey, 39% had set up focused risk management forums as part of the responsibility of corporate governance. Increasingly companies have incorporated well-structured credit insurance programmes as part of their business management plans.
And the importance of risk has not been confined to the boardroom. Since the publication of the report, the notion of strategic risk management as an integral tool for the profitable running of a company, is rapidly becoming part of corporate culture.
The Turnbull Report
The Turnbull Report was released to guide listed companies in implementing new requirements relating to internal control. The guidance was first published in the form of a consultation draft in April 1999.
The final version was released at the end of November 1999 and has since been incorporated as part of the London Stock Exchange’s combined code.
The report proposed the introduction of new management responsibilities with regard to internal controls based upon managing business risks. It also proposed that companies should have the necessary procedures in place by 23 December 1999 to ensure adequate internal controls.
It recommended that the risk based approach become part of a company’s business operations. This is to ensure that a company gives thorough consideration to all possible business risks and their outcomes.
The emphasis has since been on company boards encouraging ownership of risk and control by management across the organisation, and promoting the insights of managers as part of the risk management process
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