The quality of risk reporting in the UK has increased markedly over the past few years. So we’ve identified four of the most effective ways in which some of the best reporters are explaining how they manage their risks.

Over the past few years, there has been a marked increase in the quality of risk reporting in the UK. Unusually, among the many innovations we’ve seen conducting How does it stack up? (Radley Yeldar’s research into narrative reporting), this hasn’t been driven by any particular regulatory change or the issuance of new guidance.

Rather, this progress seems to be an organic development, as reporters react to a business environment where trust is an increasingly scarce commodity. Few market participants are willing to accept a breezy, ‘best-case’ scenario report. They now demand some sort of corresponding explanation beyond simple mitigation of key risks, as to how a business avoids something going wrong.

So, we’ve identified four of the most effective ways some of the best reporters have explained their risk management processes, although it must be said that this is really just the cherry on the cake – there’s a lot of great material out there.

1. Admit something needs fixing

GSK opens their risk section with a frank admission that lessons have been learned from past failings. This is the sort of ‘fair, balanced and understandable’ material that investors want to see.

2. Don’t blind your audience with science

Although not publicly listed, John Lewis Partnership does an excellent job of explaining its risk management processes using easily-understood graphics and accessible language.

3. Give a perspective from the top

Legal & General opens its risk section with a ‘Q&A’ from Chief Risk Officer Simon Gadd. Worlds away from the typical dry, rolled-forward boilerplate offered by many reporters in the past, this is persuasive stuff.

4. Demonstrate your appetite for risk

Principal risks and uncertainties unmoored from discussion around a business’ risk appetite lacks vital context. HSBC does an excellent job of explaining how its risk appetite is decided and applied below Group level.

This is a part of a series of articles we are posting as part of our How Does It Stack Up? Report launch. To learn more about best practice corporate reporting, visit the How Does It Stack Up? page. 

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