The increasing weight of corporate governance, more stringent regulatory processes and outdated structures are preventing boards from adequately engaging in and setting appropriate risk management cultures within their organisations, according to a Thomson Reuters survey.
The information services group said that as regulators demand greater risk oversight, its survey found that one in four boards are not actively engaged in this process, often hampered by time constraints and the significant pressures associated with reviewing an increasing number of board materials.
The survey covered more than 125 general counsel and company secretaries over a cross-section of industries and geographies globally and builds on a survey of similar respondents conducted in September 2011 so presents year-on-year trends and developments. Key findings from the latest report include:
- On average organisations prepare 92 board books annually; each an average of 116 pages. This amounts to over 10,000 pages per year, representing a 50% uplift from the average of 5,940 pages reported the prior year.
- Several organisations surveyed prepare more than 300 board books per year, close to six board books per week.
- An increased expectation of good governance drives board members to seek additional outside sources of strategic context and financial insights. Over 70% of respondents reported a need for competitor insights, financial analytics and industry information. These are sought outside of traditional board materials.
- Risk oversight by boards varies substantially and there is a wide range of behaviours. Nearly 25% of respondents said their boards don’t actively engage in risk oversight, against 55% of boards that actively set a risk culture and cascade its policy to management.
- Almost half of the respondents indicated that they never encrypt their board materials, and 18% only occasionally do so.
- Only 30% of respondents were confident that board members destroy all copies of board-related emails and documents in accordance with document retention policies.
- Over half of the respondents indicated that they had been in a situation where board members had left sensitive documents in public places or had heard of instances of sensitive board materials being left in public places
“Corporate governance is becoming ever more complex due to the fluctuating economy, increased regulatory requirements and greater regulatory scrutiny,” said Mark Schlageter, managing director, governance, risk and compliance, Thomson Reuters.
“This is placing increased responsibility on the board of Directors and greater demands on accountability and transparency. It is therefore essential that boards have all the strategic business and industry intelligence they need at their fingertips to ensure they understand the entire picture when making decisions and to have better risk oversight across their organisation.”
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