Integrating Risk Management into Corporate Governance: The Turnbull Guidance

The Turnbull Guidance for directors on corporate governance recently issued by the Institute of Chartered Accountants of England and Wales (ICAEW) now requires directors of UK listed companies to develop a corporate-wide, risk management approach to internal control, as an integral part of corporate governance policies and systems. Risk management is an established corporate governance feature in many areas; but current practices in investment appraisal, project, and health and safety management often lack integration, common guiding principles, and consistency in standards or coverage. Turnbull aims to change this by making directors specifically accountable for developing organisation-wide risk management policies and for implementing integrated, inclusive and dynamic risk management strategies. In this article, the objectives of the Turnbull Guidance and its approach to risk and risk management are examined. The specific responsibilities placed upon directors and managers are identified and discussed, and four supplementary sources of authoritative support for directors available from the ICAEW are suggested. Finally, it is suggested that Turnbull's innovative approach to regulation and risk management may offer substantive competitive advantage for complying corporations.