We particularly welcome the Higgs emphasis on independence and its central tenet that a majority of the board should be independent. Our response to the Higgs consultation document called for the most major reform of corporate governance since Cadbury and Higgs has not disappointed. Now is the time for all those with the professional expertise on which NEDs rely to come forward with their own proposals to make the Higgs recommendations work.
In the vital area of risk management NEDs can only be as effective as their experience, background and the information made available to them allows. The ability to exercise judgment about the adequacy and robustness of a company's overall risk management is at the centre of the role of NEDs. They must be able to assess the overall risk in the company and ensure it is fairly dealt with in communications with the market and the wider public.
They must be helped to acquire the skills to challenge risk management strategies and processes; without this we will continue to read about catastrophic corporate failures where the board failed to ask the right questions and to understand the answers received.
Richard Raeburn
Chief Executive of The Association of Corporate Treasurers
Should editors wish to commission an article from the ACT on its response to the Higgs Report on non-executive directors, please visit the ACT Press Room.
The Association of Corporate Treasurers (ACT) made a number of practical suggestions in its response to the Higgs consultation document, the majority of which have been accepted. In an executive capacity, treasurers typically work closely with their company Board, acting as the custodians of the risk management process; in a non-executive capacity they work, along with the rest of the Board, to set the risk management framework.