Tight supervision: Hong Kong-listed companies follow steps to improve risk management measures
Changes to the Hong Kong stock exchange’s Corporate Governance Code mean companies are improving their risk management system
Listed companies have “started getting down to the business” of establishing or improving their risk management system following changes to the Hong Kong stock exchange’s Corporate Governance Code.
The code became effective on January 1 and it is aimed at better managing risk. Listed firms have adopted the latest changes to the code with varying degrees of enthusiasm, say two experts.
“Listed companies have started getting down to business to establish or improve their risk management system, including adopting a systematic risk management framework, and setting up an organised structure to support the change initiative, for example, appointing a risk management committee or department,” says Eugene Ha, deputy managing partner at Grant Thornton.
One key change has been the requirement for an internal audit function which needs to be explained to shareholders. “So, a company can no longer be wishy-washy about how they run the company – everything of this nature has to be disclosed,” says Patrick Lo, partner of Risk Advisory Services at RSM
Hong Kong.
“The trend is towards a tightening in the supervision of listed companies and increased imposition of obligations, and towards greater disclosure so that the general public is aware of what the company is doing.”
The Hong Kong Exchanges and Clearing’s (HKEX) aim is towards more emphasis on maintaining a sound corporate governance structure regardless of the size of the company.
