New SEC rule prompts companies to disclose how their boards oversee risks: What does the SEC's new rule intend to achieve, and how do the resultant proxy disclosures measure up?

May 2010
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Point of View: New SEC rule prompts companies to disclose how their boards oversee risks: What does the SEC's new rule intend to achieve, and how do the resultant proxy disclosures measure up?

At a glance

For the first time in the 2010 proxy season, US public companies contended with the SEC's new rules intended to improve shareholder and investor understanding of the board's role in risk oversight. What is the potential impact of this new requirement and how do the disclosures measure up? PwC reviews 100 just-filed disclosures to provide some answers.

Highlights:

  • PwC’s review of 100 latest proxy disclosures, from among companies in the S&P 500, finds many explicitly confirming the board’s ownership of risk oversight.
  • Many disclosures provide useful insight into boards' perception of multiple risk categories facing their organizations. They also show how the board, as a whole and through individual committees, provides risk oversight.
  • The most informative disclosures shed light on the internal relationships between boards and management teams and the collaborative decision-making processes around robust risk management.

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