|The Board may establish a separate board risk committee or otherwise assess appropriate means to assist it in carrying out its responsibility of overseeing the company's risk management framework and policies.|
This Guideline states that the Board may establish a Board Risk Committee (BRC) or provide other means to assist it with risk oversight.
The ultimate responsibility for governing risk lies with the Board. There are, however, several ways in which risk governance can be structured within the Board:
- Oversight by the Board. If there is no delegation of responsibility of risk oversight to a Board Committee, the full Board needs to undertake the activities that are typically carried out by a BRC.
- Oversight by the Audit and Risk Committee. Here, the Board delegates oversight of the risk management and internal controls framework to the AC. Under these circumstances, the AC is commonly referred to as the Audit and Risk Committee (ARC).
- Oversight by the BRC. The Board delegates oversight for risk management to a separate BRC which is focused entirely on risk management.
- Oversight by the BRC and other specialist Risk Committees. The Board delegates oversight for risk management to a separate BRC. However, for areas of significant risks, the Board may require further support from additional specialist Risk Committees to provide more focus and oversight.
BRCs (and other specialist Risk Committees) tend to be formed in larger and more complex companies where risk management is directed to special purpose committees.
This Guideline encourages the setting up of a BRC while recognising that other risk governance structures can exist in companies.
B. SGX Disclosure Guide
C. Related Rules and Regulations
D. CG Guides
- Board Guide 2.6: Board Committees [Board Composition].
- Board Guide 2.7: Committees’ Composition [Board Composition].
- Board Guide 4.5: Risk Management [Board Duties].
- BRC Guide 1.1: Introduction [BRC Composition].
- BRC Guide Case Study 1B-1: Audit and Risk Committee or a Separate BRC [BRC Composition].
- BRC Guide Appendix 1D: Risk Governance Structures [BRC Composition].
- BRC Guide Appendix 1F: Sample BRC Terms of Reference [BRC Composition].
E. Related Articles
- “Risky business” by Lyn Boxall. (44KB)
- “Revisiting board risk governance structures” by Irving Low. (50KB)
- “Risk management: Where lies the board?” by Jerry Koh and Daniel Seow. (82KB)
- “Best practices in enterprise risk management” by Dennis Lee. (79KB)
- “Taking the right risks - risk governance defined” by Ng Siew Quan and Alvin Chiang. (194KB)
- “Risk governance: Getting it right” by Irving Low. (292KB)