Corporate reporting challenges in times of uncertainty
The questions audit and risk committees need to be asking
Boards and executives are facing a huge range and volume of uncertainties – from supply chain issues, to labour and skills shortages, inflation, interest rates, geopolitics and the need to take climate action. Managing expectations with clear and transparent communication to all stakeholder groups must be a leadership priority.
A fundamental challenge for organisations in responding to uncertain and unexpected events is designing and implementing a risk management framework that is right-sized and resilient. We consider key strategies directors can deploy to find a balance between risk and reward, whilst responding to the often conflicting demands of a broad group of stakeholders.
When finessing an organisation’s risk management framework to better handle future events and uncertainty, directors play a crucial role in:
- Understanding and approving the broad risk management parameters for the organisation
- Ensuring that appropriate oversight is in place and exercised
- Challenging management based on the board’s cumulative experience and expertise
- Benchmarking against peers and other organisations.
Another key factor that directors and management teams are required to consider are the financial reporting impacts, particularly disclosures, which are critical to a reader’s understanding of the financial report and are a key focus area for regulators. Transparent and direct disclosure to the market is a critical step and should be backed up by rigorous and tested analysis.
In this publication, we explore the governance and reporting considerations arising from uncertainties and provide a guide to ensuring your effective response.
