On 10th May 2012, the Corporate Governance Council (Council) issued its Risk Governance Guidance for Listed Boards (Guidance). This is timely as the Monetary Authority of Singapore (MAS) had recently issued the revised Code of Corporate Governance (Code), incorporating recommendations made by the Council. We view the Guidance is most relevant as it complements the Code well. A key revision of the Code states explicitly that the Board is responsible for risk governance.
The Guidance, as its name suggests, is not prescriptive in nature. Instead, it seeks to provide guidance and enhance the awareness of Board members’ responsibilities on risk governance. It provides key information on risk governance to all Board members, including factors which the Board should collectively consider when overseeing the company’s risk management framework and policies. It also gives a detailed suggested guide on the Board’s and Management’s respective roles in managing the company’s risks.
The key areas covered in the Guidance include: (i) What risk governance is; (ii) Who should be responsible for the company’s risk management system; and (iii) What constitutes a sound risk management and internal control system.