Risk disclosure in City sights

Anthony Carey, director of the business performance centre at the ICAEW, told finance chiefs attending the CFO Summit at the Belfry, that after recent difficulties faced by high profile companies, and theeconomic downturn, increased attention will be focused on how companies manage risk.

He said the way the attitudes of a company towards risk are viewed by the City could make or break them.

‘Annual report disclosures can have an impact on how the City perceives our risk management strategy,’ he said.

Although companies may be unwilling to disclose what their risks are, they can at least disclose their system of risk management in reports.

He explained that it is possible to reveal what companies are doing about risk with what they are not saying.

‘What’s important is the overall impression that you are giving,’ he said, adding companies should look at what their competitors are doing and speak to analysts in disclosing their risk strategy.

One of the main risks according to Carey is the strategic risk to reputation, as seen in the case of Barings. He said this should be a concern for topmanagement.

Given the current economic climate, Carey stressed the importance of taking risks. But he added the key is to take calculated risks, and not allowing them to happen ad-hoc.

Other stories from the summit

UK plc told to prepare now for IASs

Related reading

aidan-brennan kpmg