27 Nov 2013
Risk Governance emerged as one of the top key concerns for boards and senior management in recent years. The 2008 financial crisis, which cost the global economy an estimated US$2.3 trillion based on estimates by the International Monetary Fund (IMF), revealed that inadequacies in risk management practices and a lack of awareness regarding risk exposures among many financial institutions and listed companies were key contributing factors. Regulatory reviews of the crisis found that the lapses and deficiencies in risk management played a critical role in exacerbating the crisis.
The 2008 crisis clearly highlighted the importance of business having strong risk management practices to help them identify, assess and manage risks. to raise awareness and promote stronger risk management practices in Singapore, the Monetary Authority of Singapore (MAS) introduced more robust guidelines that require boards to provide commentaries and disclosures regarding risk management and internal controls in the revised Code of Corporate Governance (Code) 2012. In also issued the Risk Governance Guidance for Listed Boards in May 2012. In addition, the Singapore Exchange (SGX) Listing Rule (LR) 1207(10) was amended in 2011 to strengthen corporate governance (CG) practices.
To gather insights on the pace and adoption of risk management practices, the Institute of Singapore Chartered Accountants (ISCA) and KPMG jointly conducted a study of the risk management landscape in Singapore. Our study examined the risk management capabilities of listed companies and the quality of risk management disclosures in their annual reports. In addition, we assessed the state of adoption for Principle 11 of the revised Code 2012 and SGX LR 1207(10) to identify more effective approaches to enhance the adoption of risk management practices.
We hope this risk governance study will be of use to boards and management, as well as regulators. Specifically, we hope it will be useful to raising awareness and enhancing understanding of the existing guidelines and practices required to strengthen risk management capabilities and move towards a higher standard of risk governance.
Following the Welcome Address by Mr. R. Dhinakaran, Vice-President, ISCA and Chairman, ISCA Corporate Governance Committee, Mr Irving Low, Head of Risk Consulting, KPMG in Singapore presented the key findings from ISCA and KPMG Risk Management Study.
- Regulations drive higher compliance
- Adoption of new requirements are encouraging
- Size of complexity of industry and stakeholder expectations drive adoption rates
- Alan Chan, Chairman of the Council who revised the Code of Corporate Governance in 2012
- Willie Cheng, Chairman, Singapore Institute of Directors
- Professor Ho Yew Kee, Head, Department of Accounting, NUS Business School and ISCA Council Member
- Richard Teng, Deputy Chief Regulatory Officer and Executive Vice President, Singapore Exchange
- Kenneth Yap, Chief Executive, Accounting and Corporate Regulatory Authority
Mr. Irving Low also took part as the moderator for the panel discussion.
For the full report, please click here. Thank you.
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