Governance and Conduct series Board reporting

Video | May 2018 | 4:56
Transcript
Christian Blackwell: Last month we looked at governance as part of our governance and conduct series. This month we are turning our attention to board reporting, and we have been discussing internally, and have come up with five areas that you might be able to improve that reporting.  The first is data quality.  We're here with Tunde Fasoyiro, and we are going to discuss these five areas.  Tunde, what can you tell us about data quality?
Tunde Fasoyiro: One of the challenges that we find with management reports is, at times, the quality of the information is not necessarily embedded within the report. And some reports tend to be long-winded, and that has a knock-on effect on the quality.  But I think what's really important is how these reports are generated.  What sort of work, what sort of preparation has gone into it, to make sure that the output represents what management and the board can use to make an informed decision.
Christian Blackwell: What about having an effective and robust commentary around the actual data that's in the report?
Tunde Fasoyiro: It's important that this is thought through very, very carefully, so that when management are looking at these reports, there is clarity as to what it's saying, and it helps them in forming their own strategy within the business.
Christian Blackwell: And sometimes, there's a risk that, with all of the volume of data that we have, we can run the risk of over-aggregating. Is that something we should be concerned about?
Tunde Fasoyiro: The over-aggregation of reports can pose a challenge, because you find yourself in the position whereby what the report is meant to be saying could easily be – is at the risk of being distorted. Because you're trying to pull a number of reports together, it could lose its focus and its meaning.  If you have an organisation - that is multiple entities, one report, it's important that you are able to look at each aspect of the business independently, as well as looking at it on the aggregate.  So, even though you are aggregating the report together, you should still be able to cut the report, so that you can see what it's saying about one entity in comparison to the other.
Christian Blackwell: Another area of importance and focus is that management reports sometimes tend to focus on historic issues, and they're not proactive in their formation. Can you tell me a little bit more about that?
Tunde Fasoyiro: This is key, because again, looking at the reports, it's important to be able to identify where the key issues sit within the report, and what is the basis of these issues.   But it doesn't just end there.  What is being done to rectify these issues, as well, and also to prevent them from happening again, what sort of mitigants are being considered when putting this report together?
Christian Blackwell: How can we link the reporting to the risk appetite of the firm? I know that is part of how we can be more proactive.
Tunde Fasoyiro: The risk appetite of a firm is set by the board ordinarily, that's a key aspect of their corporate governance. So, it's set by the board, but it doesn't just end there, the risk appetite is subject to review, as well, because business models are constantly changing.  And then the other objective of the board is to ensure that the business continuously remains within that risk appetite.  So, if the business is looking at other ventures, given that we now operate within a dynamic, fast-paced industry, it's imperative that the board can take that into account when those recommendations are made.  But the important thing is that the risk appetite can stand the test of time, because it could be subject to external scrutiny, as well.
Christian Blackwell: Thank you very much, Tunde, and thank you everyone for listening. We'll be back next month with another governance and conduct video.

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