Companies Not Reporting Risk

Jared Wade


August 1, 2010

Over the past decade, the quantification of risk has greatly improved. The momentum for greater enterprise risk management-something propelled by rating agency-imposed guidelines and regulations like Sarbanes-Oxley-have forced many companies to figure out the dollars and cents threatened by their operations, geography and the various other factors that combine to make up a company's risk profile. But it seems that whatever progress has been made has not been significant across the business world. Not in the UK anyway. A recent report of FTSE 100 companies revealed that risk reporting remains the most difficult nonfinancial information to convey to shareholders and board members in annual reports. "Risk management discussion still seems to be difficult for companies to convey in a relevant and informative manner with some reports providing very little detail in terms of risk management regarding who is responsible, what the process is and some practical examples of how risks are managed throughout the business," concludes the report, which was conducted by Black Sun, a London-based consultancy that focuses on corporate reporting. In all, 58% of companies fail to provide a link between risks and strategy and only 23% of the FTSE go into detail about individual risk factors and their impacts on the business.

Jared Wade is a freelance writer and a former editor of Risk Management.