Overview

Robust corporate governance is the bedrock of all successful organisations. To provide valued assurance, auditors need to keep up to date with best practice and developments such as the new principles-based guidance for board risk committees and risk functions published by the Risk Coalition in December 2019, with contributions from the Chartered IIA (a former member of the group).

This short thought leadership article provides an overview of that guidance and considers the potential implications of it for audit leaders. Although initially for the financial services sector, there is an intention to extend the reach of this guidance to other sectors in line with other governance codes.

Audit leaders should take note, especially those with responsibility for the risk function, and be aware of the seventeen principles (eight board risk committee/nine risk function) that their audit committee chairs will be demanding, relevant to assurance work for governance and risk management.

No risk committee? The guidance also applies to audit and risk committee or the board itself depending on governance structure.

The role of the Risk Coalition

The Risk Coalition is an association of not-for-profit professional bodies and membership organisations committed to raising the standards of risk management in the UK and strengthening risk governance.

Their first publication targets board risk committees, the chief risk officer and the risk function. It also details how the relationship with internal audit should operate. 

The role of a risk committee in corporate governance

A risk committee is an authorised sub-committee of the board, with a similar function to a remuneration and nominations committee. It is most commonly but not exclusively seen within financial services.

In financial services firms, risk committees are established to review and report conclusions to the board. Their activity focuses on how an organisation manages and adheres to its risk…