Governance, Risk & Compliance

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For information on our Enterprise Risk Management (ERM) services click here

Understanding Governance risks:

Prospecting for business and exploiting new opportunities involves fast moving, interconnected and interdependent considerations.This is where value is created.

Gaining insight into new, emerging and hidden risks associated with the upside requires system and practice.

Deep and precise thinking is required and this is what strategic risk management is about.

Its purpose is that of enabling increased risk taking, with safety nets, for shareholders and management alike.

Strategic missteps and operational failures account for most of the corporate collapses over the last 15 years.

Financial risks were mostly consequential, and are rarely the root cause! The global financial crisis made this point brutally clear.

Examples of strategic risks include risks relating to strategy, political, economic, regulatory, and global market conditions;

and also include reputation risk, leadership risk, brand risk, and changing customer needs.

Operational risks relate to what we have to do to safeguard operations once we have worked out how we execute the business model. Operational risks therefore deal with people, systems and processes.

RMI Governance

The case for

Governance & Risk

• Most of the very spectacular failures which have occurred in recent times had little to do with risk assessment. Rather they were the product of arrogance, for example:

- Bank Boards substantially comprised of people with little experience of Banking,

- Audit committees chaired by people with no financial qualifications.

• These and other Governance mistakes resulted in Boards choosing to believe risk models depicting the chances of their worst case scenarios actually occurring being comparable to the probability of winning the UK National lottery 21 or 22 times in a row…yet these scenarios actually occurred several days in a row in real life!

• These events are likely to continue to rise given pace of change, interconnections and

interdependencies which are often not understood given complexity.

This is not News!

• We have known for decades that very many mergers and acquisitions fail to deliver on the value promised pre the event,

• Separate studies conducted as far back as the 90s’ have shown that root causes to in almost 90% of corporate collapse lie in strategic mis-steps and operational mismanagement,

• It is clear that in the world in which we live today Boards:

- Need to provide demonstrably credible evidence as to exemplary standards of corporate governance, and

- Plan for resilience for the increasing range of foreseeable, but highly improbable events, to which they are now exposed.

UK Corporate Governance Code 2010

Extracts

Leadership

“The board’s role is to provide entrepreneurial leadership of the company within a framework of prudent and effective controls which enables risk to be assessed and managed.”

Accountability

“The board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives. The board should maintain sound risk management and internal control systems”

“The board should establish formal and transparent arrangements for considering how they should apply the corporate reporting and risk management and internal control principles and for maintaining an appropriate relationship with the company’s auditor.”

Traditional Governance has been Seen to Fail

in very many cases. For this reason RMI is

introducing ‘’Active’’ Governance

Governance in the 21st Century

’In the absence of certainty, the only way to maintain potentiality is to focus on excellent execution and demonstrable resilience at the same time whilst taking as much acceptable risk as is reasonably possible’’

- Peter Bernstein

Against the Gods, The Remarkable Story of Risk

RMI Governance Services
Governance Supports and Compliance	• Preparation for SWiFT 3000 Accreditation: SWiFT 3000 establishes specific requirements for Corporate Governance Assessment based on the UK Corporate Governance Code, Code of Practice for the Governance of State Bodies and other relevant corporate governance codes • Director Training & Development seminars which may quality for CPD points • Director Induction Programmes • Improving Board & Board Committee effectiveness • Director mentoring service
Board Risk Committees	• Monitoring Material Risks • Scenario Testing • Contingency Planning • Enterprise Risk Management
Whistleblower Confidential	Provided in accordance with the British Standards Institute Whistleblowing Arrangements Code of Practice (PAS 1998:2008) This service provides demonstrable evidence of Board commitment to Corporate Governance Principals as well as providing a Shield of Confidentiality for whistleblowers through RMI.
*Pragmatic Governance!* “It ain’t what you don’t know that gets you into trouble; it’s what you know for sure that just ain’t so!” - Mark Twain