Singapore Boards Take Internal Audit and Risk Management Seriously: Report
A Culture of Risk Management in Singaporean Boardrooms
The corporate landscape in Singapore is characterized by a strong focus on internal audit and risk management, with boards playing an active role in shaping these strategies. Industry observers note that a robust system of risk management and internal controls is essential for long-term business success.
Boards’ Responsibility in Governance
- Boards are responsible for governing risk, determining the nature and extent of significant risks their company can take on
- Oversee the development and implementation of risk management policies
- May delegate responsibility to committees like the Audit Committee or a separate Board Risk Committee
Annual Review of Risk Management Systems: A Non-Negotiable
- Boards in Singapore are required to conduct an annual review of their risk management systems
- This exercise helps identify potential pitfalls and enables companies to articulate their risk profile and governance strategies to stakeholders
- The review can be done internally or with the assistance of external experts, providing an objective perspective on areas that need improvement
Transparency in Risk Management Commentary
- Boards are expected to provide detailed commentary on their company’s risk management and internal control systems in the annual report
- Includes a breakdown of principal risks (financial, operational, compliance, information technology)
- Strategies for mitigating these threats must be described
- Approach to identifying, measuring, and monitoring key and emerging risks must also be outlined
Commitment to Responsible Risk Management Practices
- Boards are required to outline how they assess the prospects of the company over a specific period
- Explain why that time frame is appropriate
- This level of transparency helps stakeholders make informed decisions and underscores the board’s commitment to responsible risk management practices.