Date posted: 2/10/2019 2 min read

Real financial implications in non-financial risks

ASIC urges companies to focus on non-financial risk.

In brief

  • ASIC review finds boards are challenged by important elements of non-financial risk management
  • Non-financial risks can have financial consequences
  • Whilst there are no easy fixes, effective oversight and management of non-financial risk is not impossible

An ASIC report on the oversight and management of compliance risk shows boards cannot afford to ignore the oversight of non-financial risks.

“As we have seen, all risk can have financial consequences,” ASIC’s Chair James Shipton said. “If not well managed, non-financial risks carry very real financial implications for companies, investors and customers.”

The report is based on 60 interviews with directors and reviews of seven large financial institutions conducted by ASIC.

Shipton noted that although the review examined companies in the financial services sector industry, the issues and “many of the lessons learnt could be applied to most public companies”.

He urged “boards of all large listed companies to read this report and review their governance practices and accountability structures with reference to our findings.”

ASIC acknowledges there are no “easy fixes” but effective oversight and management of non-financial risk is not novel or impossible. 

Shipton highlighted that “companies have managed some of these risks well in the past and continue to do so today. We hope this review provides boards with a useful roadmap to achieve this.”

ASIC’s recent media release

Read ASIC’s recent media release (19-271MR) and download a copy of the Director and officer oversight of non-financial risk report on ASIC’s website.

Download the report

Business Issues

Find out about more non-financial risks on the business issues page.

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