Companies should aim for resilience in approaching risk management says ACCA | ACCA Global
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We are happy that these proposals are more aligned with the Sharman Panel’s intentions, as it wanted to ensure that risk management and internal control should be incorporated within a company’s normal management and governance processes
—Paul Moxey, head of corporate governance and risk management, ACCA

FRC’s draft guidance could have a “profound effect” on businesses, and in due course, on parts of the public sector which tend to follow private sector standards, such as the NHS, says ACCA (the Association of Chartered Certified Accountants)

ACCA (the Association of Chartered Certified Accountants) welcomes the Financial Reporting Council (FRC) taking on the challenge of trying to bring a more joined-up approach to risk management, internal control, reporting on risk and the assessment of going concern.

In its full response to the FRC’s consultation Draft guidance to the directors of companies applying the UK corporate governance code and associated changes to the code, ACCA says that if the draft guidance was issued, it could have a profound effect on both business and elements of the public sector, such as the NHS, which tend to follow private sector standards.

Paul Moxey, ACCA’s head of corporate governance and risk management, said: 'We are happy that these proposals are more aligned with the Sharman Panel’s intentions, as it wanted to ensure that risk management and internal control should be incorporated within a company’s normal management and governance processes.

'However, the draft guidance implies that there is one way to do risk management and that is by assessing the principal risks to the company’s business model and ability to deliver its strategy. While this may be an important component of managing risk for most companies it should not be the only one. This approach tends to assume that all significant risks can be foreseen and accurately assessed.  This would be dangerous as unexpected risks inevitably happen and expected risks happen in an unexpected way.

'Company resilience, not risk assessment, should be the principal aim for boards when considering risk.'

ACCA is also pleased to see that the FRC wants to bring considerations of culture into its draft guidance. 

Paul Moxey adds: 'It’s pleasing to see the word ‘culture’ appearing frequently in this draft guidance. Culture is a vitally important subject for risk management, but sadly misunderstood, which is why ACCA is conducting a research project to understand better how culture influences corporate behaviour.

'We hope to see the FRC take a lead in encouraging a better understanding by boards and executives of how culture affects the risks faced by an organisation and how risk management processes can better take human nature into account.'

  • For ACCA’s full response to the FRC consultation on risk management, internal control and the going concern basis of accounting, see the 'Related Links' section, left of this article.

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For more information, please contact:

Alana Sinnen, ACCA Newsroom
+ 44 (0) 207 059 5807
+44 (0) 7715 812120
alana.sinnen@accaglobal.com 

Notes to Editors

  1. ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. 
  2. We support our 162,000 members and 428,000 students in 173 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 89 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence. 
  3. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.