Tuesday, July 7, 2020

Boards expect to see rise in criminal prosecutions for poor risk management

An overwhelming 96 per cent of company board members expect to see an increase in the number of criminal prosecutions of those senior executives and organisations implicated for poor risk management, according to a new RSM survey.

And yet only 21 per cent think corporate governance is critical to achieving success.

The survey, of more than 200 UK middle market business leaders conducted by leading audit, tax and consulting firm RSM, reveals a fundamental disconnect between the perception at board level of what is considered important to the future success of a company in meeting its objectives, and the reality.

Matthew Humphrey, a risk, governance and compliance partner at RSM, said: “Our research reveals some unsettling truths, and consequently a ticking timebomb for some. On the one hand boards overwhelmingly recognise the very real threat of prosecution for poor corporate governance practice, but on the other they remain reluctant to fully engage in a process that minimises those very risks and future liabilities. Recent high-profile institutional collapses provide stark reminders to all of us as to what can go wrong when fundamental aspects of corporate governance have been ignored or not fully adhered to.”

The expected rise in prosecutions includes penalties for failing to manage the risks associated with non-compliance with regulatory and legal requirements.

The survey also revealed that 28 per cent of boards have no corporate governance standards or guidelines, and that only 36 per cent of boards have allocated a dedicated corporate governance officer.

The survey is part of a wider report by RSM entitled ‘Trust in the Boardroom – a move towards sustainable governance’. The report explores people and regulatory risk in the context of major corporate governance failings.

Health and safety and data security were seen as the greatest and most challenging risks and nearly half of those surveyed saw them as such. However, 21 per cent either had informal guidelines, as opposed to formal, mandatory policies or published ones, no policy at all, or didn’t know what their position was in terms of health and safety or data security.

The issue of human trafficking and anti-slavery was, perhaps surprisingly, not that prominent in the minds of many. Thus, whilst 44 per cent believed that legislation and regulatory rules would increase significantly over the next two to five years, only 20 per cent of those surveyed saw this as the most challenging issue. As a consequence, nearly 40 per cent had informal guidelines only, no policy at all, or didn’t know what their position was on the issue.

Hannah Gibson Patel, senior HR consultant at RSM said: “If corporate governance in its entirety is done well, it can and should engender stakeholder confidence and business value. Of course, in doing this business can also often gain a much broader competitive advantage via an enfranchised workforce, empowered by trust.”

Carolyn Brown, partner and head of client legal services at RSM said: ‘The past decade has seen a major shift in our understanding of what constitutes a well-run business. Performance measurement goes far beyond a company’s ability to maximise profit margins. Good business ethics, and the ability to demonstrate those credentials through accountability and transparency are more important than ever before. Our survey reveals that business leaders recognise a tightening regulatory environment and the inevitable legal fallout to follow. Put simply, failing to act on non-financial reporting, or corporate governance, will leave you and your organisation exposed.’

A message from the Editor:

Thank you for reading this story on our news site - please take a moment to read this important message:

As you know, our aim is to bring you, the reader, an editorially led news site and magazine but journalism costs money and we rely on advertising, print and digital revenues to help to support them.

With the Covid-19 lockdown having a major impact on our industry as a whole, the advertising revenues we normally receive, which helps us cover the cost of our journalists and this website, have been drastically affected.

As such we need your help. If you can support our news sites/magazines with either a small donation of even £1, or a subscription to our magazine, which costs just £33.60 per year, (inc p&P and mailed direct to your door) your generosity will help us weather the storm and continue in our quest to deliver quality journalism.

As a subscriber, you will have unlimited access to our web site and magazine. You'll also be offered VIP invitations to our events, preferential rates to all our awards and get access to exclusive newsletters and content.

Just click here to subscribe and in the meantime may I wish you the very best.






Latest news

Lessons learned from the Wirecard scandal: the importance of government regulations

Wirecard was a Germany-based payment processor and financial services provider. The company was mostly known for its electronic payment transaction services and issuance of...

Nottingham business wins Dubai deal as countries scale up antibody screening and training

A Nottingham business which helps healthcare professionals to improve their skills in venepuncture and cannulation, has secured a major deal with Dubai-based Leader Healthcare. VeinTrain...

Loughborough University in £1m project to prepare motorways for self-driving vehicles

A new £1m project will see Loughborough University team up with Highways England to ensure the country’s motorways can accommodate connected and autonomous vehicles...

New date for the 2020 East Midlands Bricks Awards

This year’s highly anticipated East Midlands Bricks Awards has now been rescheduled for Thursday 29th October 2020. The annual Bricks Awards attracts property and construction...

Industrial property company acquires four warehouse units

Stenprop, the UK multi-let industrial (MLI) property company, has acquired a further 43,500 sq ft of MLI property across four adjoining warehouse units in...

Related news

Donington Hall to be sold on behalf of administrators

Acting on behalf of the Administrators of Donington Hall Estates Ltd and Priest House Hotel Ltd, Sanderson Weatherall has been appointed to market the...

Lessons learned from the Wirecard scandal: the importance of government regulations

Wirecard was a Germany-based payment processor and financial services provider. The company was mostly known for its electronic payment transaction services and issuance of...

Nottingham business wins Dubai deal as countries scale up antibody screening and training

A Nottingham business which helps healthcare professionals to improve their skills in venepuncture and cannulation, has secured a major deal with Dubai-based Leader Healthcare. VeinTrain...

Loughborough University in £1m project to prepare motorways for self-driving vehicles

A new £1m project will see Loughborough University team up with Highways England to ensure the country’s motorways can accommodate connected and autonomous vehicles...

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close