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June 22, 2017

FTSE 100 shareholders not adequately informed on risks

By Stephanie Wix

FTSE 100 companies are not properly informing shareholders on the risks they face and the effectiveness of the measures taken to mitigate those risks, according to research from the Chartered Institute of Internal Auditors (CIIA).

Only 32% of the FTSE 100 currently provides any measurable data on risk or mitigation in the strategic section of their annual reports, the CIIA said.

The CIIA also found that 52% failed to provide any qualitative information on the changes to risks year-on-year, and it was not stated if those risks were new or removed.

The CIIA explained that while most companies provide an outline, the figures show that shareholders do not receive enough information for a full understanding of the impact on the business. This insufficient information could be on debt and credit risk, IT risks, investment information or number of staff placed in training targeting particular risks, the CIIA said.

CIIA chief executive Ian Peters said: “A clear picture on risk is central to a full understanding of a company’s position, the quality of its earnings and potential long-term outlook. It is therefore imperative that the company has rigorous measures to assess risk and that these are reported. Simply outlining or describing risks faced is not enough – but this is what the majority of companies currently limit themselves to.”

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