The correlation between poor business performance and correspondingly poor governance
and risk management has been identified by many commentators. As observed by FSA Chief
Executive Hector Sants (FSA 2009b), business owners must be active in the risk management
process. He went on to say:
The impact of companies lacking robust risk management and good governance will, as we have
seen, impact negatively on company’s long-term investment performance. A lesson for companies
from this crisis must be that greater interrogation of how well a company is managed and the
adequacy of its risk controls are all material factors fundamental to investment management.
A focus of a firm’s risk control framework must be an effective risk and audit committee and
knowledgeable non-executives with a willingness to challenge senior management.
In light of these comments, it is encouraging that a survey conducted in October 2008 by the
Economist Intelligence Unit32 found that 92% of those surveyed had or were about to review
the way they manage risk. However, concerns were expressed that despite the recent credit
crisis, risk was still stigmatised as a support function, boards were still short of risk management
knowledge and experience and risk was still seen as a peripheral “compliance” issue
rather than an essential part of strategy. On a more positive note, the majority of respondents