As the deadline to comply with the new UK Corporate Governance Code approaches, risk leaders are collaborating with peers to ensure they respond appropriately. In this interview, Christina Frutuoso, our Head of Engagement and Insights, highlights the recent key trends and approaches shared during these peer exchanges.
Summary of interview sections:
- 0:00 Introduction: collaborations on UK Corporate Governance Code reform
- 08:10 Board/executive engagement: how are risk leaders engaging the business?
- 11:50 Defining materiality and making declarations: providing assurance for declarations
- 13:30 Leveraging existing requirements: avoiding duplicated efforts
- 14:50 Dry runs: an iterative way to prepare for the deadline
- 16:15 Assurance mapping: why lots of FTSE companies are focusing on this
- 18:20 What's next?: upcoming collaborations on UK Corporate Governance Code reform and how you can get involved
Meet Christina:
Since the FRC made its first announcement of UK Corporate Governance Code reform back in May 2023, Christina and the Risk Leadership Network team have been facilitating bespoke collaborations for FTSE and UK members of Risk Leadership Network. During these collaborative meetings, organisations have shared, under the Chatham House Rule, how they are tackling the code reform.
So, how are UK companies responding? What are risk leaders doing to provide assurance for the declarations? And how are risk teams engaging their board and wider business?
Listen to the 20-minute interview to hear Christina explore the trends and approaches shared during these collaborations between risk leaders in our network.
To help give new perspectives, we occasionally invite non-members to join our collaborations. Register your interest here in getting involved in our upcoming collaborations on the UK Corporate Governance Code.
Highlights from the interview
By collaborate, is this just risk leaders having a chat?
There's definitely more to it than that. Risk leaders at FTSE and large UK organisations have exchanged ideas about their interpretation of the code changes, what they were prioritising, and on some occasions, even shared redacted versions of part of their approach on screen.
Why is peer collaboration so valuable with UK Corporate Governance code reform?
It's that peeking behind the curtain and getting insights on how other organisations' risk functions are tackling shared challenges that is really valuable. Recent examples of collaborations around the code changes include the sharing of assurance maps and dry runs and testing approaches with peers ahead of the changes coming into effect.
"Staying with the pack" - why's that so important when it comes to UK Corporate Governance code reform?
Of course, everybody wants to make sure they comply; nobody wants to undercook their response compared to their peers. But also, nobody wants to launch a huge response in a given area where nobody else is — it's expensive, and it's resource-intensive. Knowing that what you're doing is comparable to peers, when it comes to UK Corporate Governance Code reform is really valuable.
What have risk leaders been prioritising ahead of that 1st January 2025 deadline?
Engagement with the business has been a key discussion point. The consensus at the latest meeting among members was that the board and the audit and risk committee are pretty engaged on the controls assurance process - this hasn't always been the case. But the challenge for many at this stage appears to be engaging the executive committee.
Some members told us that this is because members of the executive committee have less overall awareness of the risk and controls framework.
Did any members share solutions for engaging the executive committee on UK Corporate Governance Code reform?
A few companies were holding "risk days" for their senior management team. For some they were annual, for others, they were one-off events. Mostly these workshops were going back to basics to help the senior management team's understanding of the risk and controls framework. Some said they even went back to defining "what is a risk?" and "what is a control?".
How are risk leaders tackling the declarations that companies need to make under the new code?
Risk leaders want to ensure a solid foundation of data and assurance and control testing to lead their companies to such declarations.
One of our members shared that his risk team had started with draft statement declarations and presented these to their board to initiate discussions. They're now essentially working backwards to determine what sufficient assurance will be needed to make these declarations. Several other members want to take this approach too.
Members often use our network meetings to get fresh thinking so they don't have to reinvent the wheel. Have you noticed any such solutions surrounding the code changes?
One clear outcome that comes to mind is the fact that several members shared how they're leveraging existing requirements, reporting and other regulations to avoid duplicated efforts. So members are using existing controls frameworks, workstreams, assurance efforts and data collection for TCFD, CSRD and other requirements as part of their corporate governance code change preparations.
You mentioned "dry runs" earlier. What did you mean by that?
Instead of gunning for perfection with the controls assurance process, ahead of the formal introduction of the new requirements, a number of companies are taking a more iterative approach. On each dry run, they're testing and upgrading the process so that it, eventually, reaches the required standard before the code becomes mandatory.
The idea was first brought up in a collaborative virtual meeting that we facilitated at the end of September. It turned out quite a few of the FTSE organisations present were taking this approach.
More on dry runs in the full interview.
What's next at Risk Leadership Network for the UK Corporate Governance code?
We'll continue to facilitate collaboration in response to the priorities that our members raise with us. Our UK members are very active on the UK Corporate Governance code, and we've got three virtual meetings coming up, each with a different focus area:
- Effectiveness reviews
- Readiness plans
- Engaging with the board and business
These meetings are for our member organisations, but occasionally we invite non-members to attend if it gives another perspective for participants. Please fill in this form to request to be considered.
How to join Risk Leadership Network
Find out more about how you can join Risk Leadership Network too:
- Watch a 2-minute intro video
- See real-life case studies of ways we've supported our members
- Find more information about membership
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Collaboration in action: UK Corporate Governance Code Reform
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