The challenge for a responsible business is to find ways to ensure that the rewards it seeks are supported by sensible management of the risks that confront it.
This ACCA report considers how companies should approach risk management, with particular emphasis on reputational risk.
The paper makes the following recommendations:
- Businesses should prioritise the recruitment of senior executives and financial staff who have a strong ethical compass
- Businesses should ensure a strong ethical culture; this should include setting the right tone at the top and then ensuring, and monitoring, that this is reflected throughout the organisation. Listed companies should set out how they do this in their annual reports
- Businesses should be aware of outsourcing their sense of ethical responsibility to compliance with external rules
- Businesses should maintain the higher internal profile - with sufficient resources - given to the risk function since the onset of the financial crisis and not be tempted to cut this back when recovery sets in