FTSE 100 outperform risk reporting requirements

FTSE 100 companies are reporting risk above and beyond what the UK’s regulatory regime requires, according to research undertaken by Marsh.

In a White Paper that examines ten years of annual statements by 41 of the current FTSE 100, Marsh found that many see a value beyond regulatory compliance from reporting on their risks and risk management.

Charles Beresford-Davies, managing director of Financial Services at Marsh, said: “Ten years into the Combined Code, companies in the FTSE 100 are telling us that it continues to be a useful framework to evaluate the way in which they manage risk, but that they see a value beyond regulatory compliance from reporting on their risks and risk management. This is reflected in the increased commentary on their key risks and risk management, which often goes beyond the requirements of the Code.

“In our experience this is because listed companies recognise that reporting on risk can demonstrate to the investment communities that a company is well-managed, is better able to respond to market volatility and unwanted surprises, considers risk as well as opportunity when making and vetting major decisions and uses shareholders capital in an optimal way.”

“The different levels of reporting between industry sectors also highlights the Code’s flexibility. However, there are some areas which, in the experience of Marsh, represent best practice and, as the report demonstrates, are not as consistently reported by the FTSE 100 despite their demonstrable benefits. These include the ownership of risk at board, division and project level, the quantification of risk tolerance and the quantification of risk exposures.”

Sectors covered by the paper include Media, Telecommunications, Utilities, Oil & Gas, Technology, Real Estate, Financial Services, Travel, Retail and Healthcare.

The white paper also includes commentary from risk managers at FTSE 100 companies BP, British Airways, Legal & General, Lloyds TSB, Smith & Nephew and Tate & Lyle.