The proposed reforms to the UK Corporate Governance Code have been welcomed by the Institute of Internal Auditors -  UK and Ireland (IIA) as a practical step in reinforcing good board behaviour and, in particular, the board’s responsibility for the risks the business is taking. 

The IIA believes that by making risk management a clear, whole-board responsibility, the revisions to the code leave non-executives with an urgent need for reliable knowledge and information to understand the key risks facing their businesses and to help them with their challenge role. However the Institute’s Chief Executive has voiced concerns about some remaining elements of the code.   

Institute Chief Executive, Dr Ian Peters, said, “Now is the time to recognise that it is a principle of good governance for the board to have available to it the services of professional internal auditors. Internal auditors can play a key role in promoting greater transparency and accountability of boards. They can do this by ensuring that a regular flow of intelligence and assessment on the effectiveness of the system of internal control, reaches a more receptive board. The board as a result will be better placed to discharge their risk management responsibilities fully. Equally importantly, they will be able to demonstrate to shareholders and other stakeholders their commitment to good governance. This can only benefit the wider public interest and the UK economy as a whole.”  

But, Peters warns that there is now a danger that the benefits of an increased profile for risk management within the proposed new code could be compromised by the fragmented approach to principles on business management.