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structure for communication are present in
the organizations.’ Ten years earlier, Allison
had suggested ‘the establishment of a tenured,
independently funded safety board
which would possess veto power over operational
decisions which placed the lives of
employees or the general public at risk’.
Allison’s views were based on all of the disasters
which he studied where serious communication
breakdown occurred during the
crisis which had been openly acknowledged
by ‘totally separate judges and investigative
committees’.
The Institute of Chartered Accountants in
England and Wales (ICAEW) established the
Turnbull Working Party to provide assistance
to companies in implementing internal control
requirements including crisis management
strategies; a report was drafted in April 1999,
published on 28 September 1999 and became
a statutory requirement in December
2000. It represents the final element in a
combined code on corporate governance and
full compliance with the code became a
requirement for listed companies from 23
December 2000. The combined code incorporates
the Turnbull Report, the Cadbury
Report and the Hampel Report and suggests
key performance indicators as follows:
• Obtain management co-operation.
• Prepare a plan.
• Identify objectives.
• Prioritize the risk to the achievement of
the above objectives.
• Establish a risk management policy.
• Consult through the organization.
• Improve the culture of the organization,
where and if appropriate.
• Keep the whole plan simple and straightforward.
• Monitor.
• Incorporate the Turnbull plan in the
organization’s management and corporate
governance processes.
The author of the Report, Nigel Turnbull,
states ‘we have focused on producing practical
guidance that will ensure that the board is
aware of the significant risks faced by their
company and procedures in place to manage
them. Executive management is responsible
for managing risks through maintaining an
effective system of internal control and the
board as a whole is responsible for reporting
on it.’ Public Limited Companies are expected
to have a solid internal control system in order
to safeguard the investments of shareholders
and the assets of the company.
The effectiveness of internal controls has to
be reviewed at least once a year and the risks
and issues a business faces should be regularly
evaluated. Risk management, operation and
compliance and financial controls should be
part of a company’s review and the entire
board of directors is responsible for risk
management. An organization has to keep
under review the requirement of an internal
audit department and the contingency plan
of the Turnbull Report was put together so
companies can focus on internal controls and
specifically their crisis management programme.
The report states that ‘social and
environmental factors should be included in
risk assessments along with conventional/
financial threats’. The report also recommends
that listed companies radically review their
risk management programmes. Thus Nick
Bent of Burson-Marsteller, a large PR consultancy,
stated ‘the Turnbull Report means that
companies will have to take a broad, sophisticated
approach to risk, explicitly including
environmental matters and threats to reputation.
Reputation is a key element of the intangible
assets of a company and hence its value.’
© 2004 Sandra Oliver for editorial matter and selection;
individual chapters, the contributors