Risk Coalition begins consultation on board risk functions

The Risk Coalition has issued a consultation on its ‘Principles and guidance for board risk committees and risk functions in the UK financial services sector’, which was published on 26 June.

According to The Risk Coalition, which is a network of not-for-profit professional bodies and membership organisations which aim to improve risk governance and risk management in the UK financial services sector, the responses to its consultation will be considered in the development of the final version of the guidance.

The Risk Guidance Initiative is The Risk
Coalition’s first project, with some 60 individuals interviewed as part
of the development of the guidance, including risk committee chairs, chief risk
officers, heads of internal audit, investors and academics.

It is now seeking views from board
risk committee chairs and members, chief risk officers, chief executives and
other senior leaders, chief internal auditors, company secretaries and
investors. It is also asking for responses from those outside of financial
services.

The consultation will close on 20 September 2019, but The Risk
Coalition asked that individuals and organisations respond as early as possible
during the consultation period, with a summary of responses then made available
in a feedback statement when the final guidance is published at the end of
2019.

It confirmed the outreach programme will continue over the
consultation period and will contribute to the final guidance.

The guidance sets out the “need for coherent, principles-based
good practice guidance for board risk committees and risk functions” and will
provide a benchmark for “what good looks like” in an effort to improve the
overall quality of risk management within the UK financial services sector, The
Risk Coalition states.

There are two standalone parts to the guidance. Part A focuses on “what
can reasonably be expected of a mature board risk committee through defining a
number of key principles and supporting guidance”. Part B looks at “the role
and responsibilities of the chief risk officer and second line risk function”.

The consultation asks nine specific questions on areas where The
Risk Coalition’s initial outreach work has indicated there are divergent practices
and opinions.

One such question is, how the board risk committee should interact
with other board committees generally, to ensure risk oversight at board level
is conducted in the most effective way.

The consultation also asks for views on how the board risk
committee should interact with the remuneration committee in relation to
incentives and pay awards, and whether the draft guidance provides sufficient
clarity of the role of the board risk committee in its relationship with the
audit committee.