We are in the process of setting up a Risk Committee (as a Committee of the Board) with a Risk Management Team and Operations Team reporting into it. The new framework will enable the Board (via the Risk Committee and Audit Committee) to focus on the top priority and strategic risks of the Company. Risks are identified within five major categories: (i) corporate risks; (ii) financial risks; (iii) global, economic and market risks; (iv) regulatory risks; and (v) operational risks.
Have other members adopted a similar approach and found it to be successful (comments welcome) ; and do they have ToR’s for their Risk Committee which they would be willing to share?
(If not a public document any ToRs can be sent via me. David M)
We have a Risk Committee encompassing all Operating Board Directors incl CEO and CFO, and Heads of Function. It is not a Board Committee, but the Audit Committee annually reviews the risk management process, and the Main Board receives ab annual report on riskmanagement activity. We also cover new and emerging risks at every Board meeting, led by Co Sec, who chairs the Risk Committee. ToR sent to DM.
I previously worked at a listed financial services firm which had a separate Risk Committee and it was run along similar lines to those you’ve outlined above. You may find ToR on websites of financial service sector firms or failing that I’m sure the ICSA have published guidance in this area.
This approach works well, but I would caution on taking up too much time looking at risk schedules. We have found it better to invite those responsible for mitigating key risks to attend the Risk Comm and explaining how they do this, what controls are in place etc. The TOR of our Risk Comm are on our website.
We have a very similar appoach,with a Group Risk Management Committee, although this is not a committee of the Board. It oversees the work of separate risk management committees covering trading and commodity risk, operational (including helath and safety) risk, development risk and risk management committees in our two smaller operating subsidiaries.
Happy to share ToRs, which I will send to David.