The 2007 financial crisis resulted in a reassessment of the efficacy of corporate risk management. There was a feeling that it had become an exercise in box ticking and that current corporate governance procedures were ill-suited to the task at hand and unable to cope with the challenges faced by 21st century global commerce.

The FRC recognised this and changed its corporate governance code as a result. It is now in a period of consultation with companies to better understand appetite for risk and how companies are approaching the issue.

“When we met nearly one hundred company chairmen last year... we started each meeting by asking them what their boards were doing differently as a result of what they observed happening in the banking sector,” says Stephen Haddrill, chief executive of the FRC. “Almost without exception, the first answer was ‘spending more time thinking about risk’.”

As a result of those meetings, the FRC has delayed its update of the Turnbull Guidance, which sets out best practice for internal control. “We felt it was premature to attempt to define good practice before it had the chance to develop,” says Haddrill. “There is a lot of deep reflection going on in boardrooms and committees at the moment, and the FRC needs to tap into that.”

Whose responsibility?