ACCA says that Resilience should be Observed by Companies in Risk Management
The Association of Chartered Certified Accountants, ACCA , made an observation that the FRC’s draft guidance could have a weighty business effect and in due course on some parts of the public sector that follow the standards of the private sector like the NHS.
The Financial Reporting Council (FRC) was welcomed by ACCA by taking up on the challenge of trying to bring an approach that is joined up in risk management, risk reporting, internal control and the going concern assessment.
In responding to the FRC’S consultative draft guidance to the company directors that apply the UK corporate governance code and the alterations associated to the code, ACCA is of the opinion that if the draft guidance was issued, there would be a philosophical effect on public sector elements and business as well like the NHS that tend to follow the standards of the private sector.
ACCA head of corporate governance Paul Moxey and the risk management complimented that they are pleased that the proposals are well aligned with the intentions of Sharman Panel since it wanted to make certain that internal controls and risk management need to be incorporated in an organization’s process of governance and management.
Nevertheless, the draft guidance made an implication that there is only one way of doing the risk management which is by making an assessment of the principal risks of the organization’s model of business and the ability of delivering strategy. This being a significant component of risk management for many organizations, this need not be the only one. The approach assumes that all major risks may be foreseen and assessed with accuracy. This can be dangerous since unanticipated risks unavoidably happen and the likely risks happen in a way that is not expected.
When boards are making a risk consideration, their principle objective should be the company resilience and not the risk assessment. ACCA is happy to make an observation that FRC would like to bring culture considerations into the draft guidance.
Culture is a fundamental subject in managing risks but unfortunately it is misunderstood and this is the reason as to why ACCA conducts research project to better understand how corporate behavior is influenced by culture.