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Corporate governance, risk and internal controls - Coggle Diagram
Corporate governance, risk and internal controls
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In practice, the CS should advise and facilitate the board to
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Identify the principal risks it is willing to take to achieve its strategic objectives and those that could threaten the company's business model, future performance, solvency and liquduity
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At least annually carry out a review of the effectiveness of the risk management and internal control systems
Annually carry out an assessment of the future viability of the company for a period to be determined by the board considering the organisation's current position and the principal risks. This provision is instead of the current going concern statement which only covers a 12 month period. The change has been introduced as a period of 12 months may not be appropriate for every company, allowing the flexibility for boards to determine their own time periods was seen as beneficial
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FRC Guidance
Makes clear that when developing an organisations risk management and internal control systems board should inhibit sensible risk taking that is critical to growth
The risk management process should support decision making in the organisation and be part of the normal business processes within the organisation
States that the board has ultimate responsibility for risk management and internal control and also the board is resposbinle for ensuring that an appropriate culture has been embedded throughout the organisation
Failure to ot embed them in the culture of the organisation is perceived by many to be cause of the failure of many organisations. Boards are now expected to take responsibility for ensuring that appropriate culture and reward systems have been embedded throughout the organisation
In addition to giving guidance on the board's responsibilities under the Code, the guidance also provides on how the board may exercise those responsibilities under the following points
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How the board ensures that there is adequate discussion at board level on risk management and internal controls
Consideration of the skills, knowledge and experience of the board and management in risk management
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