Subject area: “Guidance on Risk Management, Internal Control and Related Financial and Business Reporting”
In the very eloquently and succinctly FRC (Financial Reporting Council) titled guidance paper called “Guidance on Risk Management, Internal Control and Related Financial and Business Reporting” (FRC, September 2014), setting out the background to the paper and guidance, we came across this interesting turn of phrase: “…to provide entrepreneurial leadership of the company within a framework of prudent and effective controls which enables risk to be assessed and managed” [our highlighted words].
Therefore, according to the FRC they expect Boards of all companies, subject to this code, to be ‘entrepreneurial’? Just stop and think for a moment whether every single Board meeting you attend as a director of a public or private limited liability company has an element of entrepreneurial spirit in its proceedings or on the agenda. If not, why not? This very seemingly austere, formal (and formulaic) governance process should be married and reconciled with being entrepreneurial…?
How do we foster and encourage this ‘status quo’ challenging or disruption creation spirit in formal settings like board meetings; or is it only in the execution or the executive director’s duties that they display this ethos? And what about the Non-executive directors? What is their role in fostering the ‘entrepreneurial leadership’?
The background paragraphs go on to state that “Good stewardship by the board should not inhibit sensible risk taking that is critical to growth.”
Therefore, the counter balance to enthusiastic entrepreneurialism is therefore a measured risk-based approach in underpinning that growth target strategy?
Do you have a framework or measured risk-based approach or methodology in place to serve as the bedrock of your strategic management processes? If not, where do you start?