FRC: Investors note improved information on risk, but more needed on viability reporting

23 November 2017

Investors want a better understanding of how boards identify and manage risk to protect the sustainability of companies, according to a report from the FRC’s Financial Reporting Lab, which sought to understand how companies can better inform investors on the risks they face and their viability.

In its report the Lab found that, since the financial crisis, companies have made enhancements to their risk reporting and investors have seen better engagement with them on how they are managing their risks. However, further improvements could be made and the report provides guidance and practical examples on how companies can find a balance between reporting that is specific, whilst not revealing commercially sensitive information.  

On the viability statement, companies have found the process of developing their statement to be helpful in better analysing their risk appetite, particularly by incorporating stress and sensitivity analyses into their risk management processes.  However, companies need to be bolder in their viability report disclosures to ensure that they provide investors with better information on the company’s longevity and relevance in the market.  The report encourages companies to develop their viability statements in two stages – firstly to assess prospects, and secondly to make their statement of viability.

Full press release

Full report

© FRC