1. Risk and Governance Reporting:
p g
Challenges for Effective Disclosures
Wim A. Van der Stede
CIMA Professor of Accounting & Financial Management
London School of Economics & Political Science
L d S h l fE i P li i l S i
|1| Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

2. With every major corporate crisis
comes a new wave of regulatory
reform, yet seemingly incapable
of preventing the next one
|2| Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

3. Regulation
g
• Incompleteness
• Imprecision
• Substitution
• Unintended consequences
|3| Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

4. Will who or what is fit to serve
serve well?
|4| Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

5. More or less regulation?
Tussle between
• Self-correcting market forces
• Over-prescriptive regulation
|5| Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

6. Comply or explain
py p
|6| Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

7. Comply or explain
py p
• Companies are ‘remarkably
remarkably
compliant’
• ‘Box-ticking’ by both issuers
and users
|7| Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

8. Explain and demonstrate
p
• Minimal guidance
• Learning as a disciplining mechanism
and to combat obsolescence
• ‘Corporate mandate’ driven
|8| Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

9. UNCTAD
Disclosures should be shaped for
p
real use and addressed directly
to value
|9| Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

10. Accountability is a precondition
y p
for responsibility
Relevant information is the key
mechanism for vigilant stakeholders
g
to enforce accountability
| 10 | Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

11. Disclosures should be shaped for
real use and addressed directly
to value
| 11 | Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

12. FRC (June 2010))
(
The personal reporting on governance
by chairmen as the leaders of boards
might be a turning point in attacking
the fungus of ‘boilerplate’ which is
g p
so often the preferred and easy
option in sensitive areas but which
is dead communication
| 12 | Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

13. Accounting risk v.
governance risk
or …
the things addressed directly
to value
| 13 | Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

14. Regulators should be firm in their
g
requirement for disclosure but
restrained in their prescription
p p
Users should be vigilant for credible
disclosures and skeptical for merely
cosmetic claims by issuers
| 14 | Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

15. Issuers with robust risk processes
p
should embrace the opportunity to
‘make their case’ rather than to be
subjected to ever more onerous,
expensive rules
p
| 15 | Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

16. Complacency is the enemy
p y y
Discipline and learning are its
p g
best repellants
Regulation should provide the first
without numbing the second
g
| 16 | Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede

17. Risk and Governance Reporting:
p g
Challenges for Effective Disclosures
Wim A. Van der Stede
CIMA Professor of Accounting & Financial Management
London School of Economics & Political Science
L d S h l fE i P li i l S i
| 17 | Controlling Insights – Internationaler Controller Verein | Steyr – Friday November 18th 2011
© 2011 Wim A. Van der Stede