corporates continue to focus more closely on risk management,
compliance and keeping ahead of the ever changing regulatory
framework. Bank’s lending to businesses are no different, evidenced by
compliance related headcount increasing twice as fast as other
Following ASX corporate governance guidelines now including a
requirement to recognise and manage risk, CFO’s and treasurers have
reacted swiftly and take their obligations much more seriously. A
number of major enterprises undertake regular ‘Risk Appetite
workshops’ with their boards to ensure risk management is firmly
integrated into the corporate strategy.
Fallout recently experienced by IOOF and NAB’s UK operations clearly
demonstrates the significant downside risk facing management if
material operational and business risks are not prepared for and
Reputational damage is in most cases impossible to counteract,
resulting in risk management procedures emerging as an increasingly
important business function as it becomes inextricably linked with
Continuity and contingency plans are coming to the fore as businesses
seek to minimise the market share impact of major events. Where
insurance was traditionally enough to cover an ‘uncontrollable event’,
the flow on impacts are now much better understood and strategically
Flow on impacts include market share losses, management distraction
due to plant rebuild, time to reach full capacity and intangible
elements such as brand management or mind share loss.
Even the most
innovative and well-structured insurance policies struggle to capture
longer term damaging impacts in particular.
A May 2015 survey of the Top 500 institutional enterprises conducted
by East & Partners indicates one in two CFO’s and treasurers believe
ASIC should hand over its regulatory and assistance role, compared to
12.2 percent who felt ASIC should handover its corporate watchdog
When asked if ASIC was effective in regulating or assisting
business, CFO’s scored ASIC at 2.88 on a scale where 1 is effective
and 5 is ineffective.
These results support the notion that ASIC is successfully fulfilling
its role as a corporate watchdog but not doing enough to regulate and
assist businesses directly.
Risk management strategy is front and
centre with most organisations, providing impetus for new primary
research streams that investigate the way different industries
fundamentally treat risk.
Generating unique data that calculates the precise external spend of
Australian corporates risk management and compliance obligations is a
key priority in the 2015/16 financial year.
What this figure actually represents in terms of risk management
advisory or product based decisions presents is critical for
corporates seeking clarity in terms of peer benchmarking and managing
pressing risk management, compliance and regulatory challenges facing
corporates across all industries and sectors.