Risk management to be at the heart of the new FRC Code - Airmic lecture

Although the review of the Code is still very much work in progress - the FRC is currently considering 250 submissions to their consultation - Haddrill gave a strong indication of their thinking on a wide range of matters.

He endorsed Airmic's submission (see panel below) that the code should promote openness and honesty in business, which he said were essential to restore the public trust that had been eroded by high-profile corporate failures combined with excessive remuneration for senior executives. He agreed with Airmic on the importance of corporate culture, stressing the need for full engagement with employees and other stakeholders. And he implied that risk management would be at the heart of the revised Code:

He had strong words to say about the use of annual reports. They should be fair and balanced, and not used purely for marketing purposes.

He went on to emphasise the importance of diversity and succession planning. "A diverse board avoids the dangers of group think and encourages wide ranging ideas and views," he said.

Despite his strong endorsement of risk management, Haddrill cautioned against expecting too much prescription or detail in the revised Code. The purpose of the document, he pointed out, was to establish the right principles and then let companies work out the best ways to achieve them. The success of the Code would depend to a large degree on actions taken by shareholders to ensure that it was followed, he said.

The Code applies to all publicly listed companies and is closely watched internationally. The FRC plans to release the new version in the Summer, with late-July as a provisional target date. It has promised that it will be 'shorter and sharper' than the current version.

A capacity audience of seventy Airmic members and partners attended the event at the Marsh building, which was followed by informal drinks and networking.