The increasing prevalence of corporate governance, more stringent regulatory processes post-crash and outdated structures are all preventing boards at all types of organisations from adequately engaging in and setting appropriate risk management cultures within their firms, claims a new Thomson Reuters survey.
The data services group said that as financial regulators demand ever greater risk oversight, its latest survey showed that one in four boards are still not actively engaged in this process. Boards of directors across financial and other organisations are often hampered by time constraints and the significant pressures associated with reviewing an increasing number of boardroom materials, covering everything from green policies, corporate social responsibility (CSR), regulatory compliance, reporting duties and so forth.
The Thomson Reuters survey questioned more than 125 general counsel and company secretaries from various industries and geographies around the world. It builds on a survey of similar respondents conducted in September 2011 says the firm, so presents year-on-year trends and developments. Key findings from the latest report include:
• On average organisations prepare 92 board books annually; each an average of 116 pages. This amounts to over 10,000 pages per year, representing a 50% uplift from the average of 5,940 pages reported the prior year.
• Several organisations surveyed prepare more than 300 board books per year, close to six board books per week.
• An increased expectation of good governance drives board members to seek additional outside sources of strategic context and financial insights. Over 70% of respondents reported a need for competitor insights, financial analytics and industry information. These are sought outside of traditional board materials.
• Risk oversight by boards varies substantially and there is a wide range of behaviours. Nearly 25% of respondents said their boards don’t actively engage in risk oversight, against 55% of boards that actively set a risk culture and cascade its policy to management.
• Almost half of the respondents indicated that they never encrypt their board materials, and 18% only occasionally do so.
• Only 30% of respondents were confident that board members destroy all copies of board-related emails and documents in accordance with document retention policies.
• Over half of the respondents indicated that they had been in a situation where board members had left sensitive documents in public places or had heard of instances of sensitive board materials being left in public places.
“Corporate governance is becoming ever more complex due to the fluctuating economy, increased regulatory requirements and greater regulatory scrutiny,” said Mark Schlageter, managing director, governance, risk and compliance, Thomson Reuters.
“This is placing increased responsibility on the board of Directors and greater demands on accountability and transparency. It is therefore essential that boards have all the strategic business and industry intelligence they need at their fingertips to ensure they understand the entire picture when making decisions and to have better risk oversight across their organisation.”