An Integrated Management System (IMS) Supports Good Corporate Governance

The Financial Reporting Council (FRC) UK Corporate Governance Code (2024) contains 18 principles (A-R).

These include key requirements, italicised below, which are readily delivered or enabled by an IMS.

SECTION 1 - BOARD LEADERSHIP & COMPANY PURPOSE

• A The board should ensure that the necessary resources, policies and practices are in place for the company to meet its objectives and measure  performance against them;
• B The board should establish the company’s purpose, values and strategy, and satisfy itself that these and its culture are aligned;
• E The board should ensure that workforce policies and practices are consistent with the company’s values and support its long-term sustainable success. The workforce should be able to raise any matters of concern.

SECTION 2  - DIVISION OF RESPONSIBILITIES

• I The board, supported by the company secretary, should ensure that it has the policies, processes, information, time and resources it needs in order to function effectively and efficiently.

SECTION 4  - AUDIT, RISK & INTERNAL CONTROL

• M The board should establish formal and transparent policies and procedures to ensure the independence and effectiveness of internal and external audit functions and satisfy itself on the integrity of financial and narrative statements;
• O  The board should establish and maintain an effective risk management and internal control  framework, and determine the nature and extent of the principal risks* the company is willing  to take in order to achieve its long-term strategic objectives.

* Mitigating the ‘Principal Risks’ identified by the Board is the responsibility of the company’s CEO and their Executive Team. Some, like ‘Regulatory Change’, can be mitigated to a large degree by strategically declaring ‘No-Go areas’. However others, such as ‘Insufficient Liquidity’, ‘a Major Safety Incident’, ‘a Major Legal Breach’, et al., can only be demonstrably mitigated by supplementing the business-directing fundamentals of purpose, mission, values and strategy with some more explicitly mandatory, company-wide controls in the form of Policies, Standards, Processes and Procedures which everyone within the company must comply with.

Each Executive delegates accountability for producing and complying with these controls to the members of the senior management team who report to them. These managers in turn supplement corporate requirements with the mandatory content and guidance they deem necessary to support compliance within their own Functional or Business area.