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UK Corporate Governance Code Overhaul Forces Firms to Rethink Risk & Control

Key Takeaways

  • Provision 29 demands transparency: By 2025, boards must declare the effectiveness of their risk management and internal control frameworks.
  • Not a UK SOX: Unlike U.S. regulations, the UK Corporate Governance Code (UK CGC) focuses on proactive, continuous risk oversight rather than financial control attestation.
  • Breaking down silos: Organizations face challenges in centralizing and integrating risk management across departments.
  • Strategic alignment: Risk must be embedded into business strategy to move beyond a compliance-only mindset.
  • Investor trust: Transparent, detailed reporting is essential to maintain credibility with regulators and stakeholders.

Deep Dive
The Financial Reporting Council’s revised UK Corporate Governance Code (UK CGC), effective January 1, 2025, is pushing companies to overhaul their risk management and internal control frameworks. While most provisions take effect in 2025, Provision 29—requiring boards to formally declare the effectiveness of their risk frameworks—will be enforced from January 1, 2026. This phased implementation has sparked intense discussions among compliance professionals, corporate leaders, and risk strategists as they balance immediate updates with long-term preparedness.

In my recent workshops across London, Utrecht, and Stockholm, governance experts highlighted the urgency of this transition. Attendees shared insights on navigating the revised expectations, emphasizing the need for strategic planning and cross-departmental collaboration.

Provision 29: A New Era for Risk Management
Though some compare the changes to the U.S. Sarbanes-Oxley (SOX) Act, the UK framework is distinct. Instead of focusing on financial controls, the UK CGC prioritizes proactive, continuous risk oversight.

A UK bank executive noted, “Provision 29 is reshaping our governance strategy. We’re identifying critical controls, preparing board disclosures, and aligning with industry standards to stay ahead. Assurance is crucial, especially in areas like cybersecurity and third-party oversight.”

A smaller UK firm echoed this, stating, “The workshop helped us rethink governance. We’re now integrating risk and control frameworks into our business strategy, moving beyond mere compliance.”

Challenges Facing Risk Leaders
During my workshops, governance and risk professionals highlighted their top concerns:

  1. Fragmented Risk Ownership: Many organizations lack a unified approach, with risk knowledge trapped in departmental silos.
  2. Weak Governance Culture: Effective oversight requires strong board leadership and a well-defined risk culture.
  3. Ambiguity in ‘Ineffective’ Risk Management: Firms struggle to define what constitutes a failing control system.
  4. Complexity & Bureaucracy: Compliance fatigue threatens to overwhelm businesses with unnecessary red tape.
  5. Cyber & Emerging Risks: Boards must demonstrate proactive management of evolving threats, not just reactive measures.
  6. Accountability & Buy-In: Embedding risk awareness across all business functions remains a significant challenge.

Strategies for Success
To comply with Provision 29, businesses must adopt a strategic, risk-based approach. Key steps include:

  1. Breaking Down Silos: Foster cross-departmental collaboration to make risk management an enterprise-wide effort.
  2. Integrating Governance into Strategy: Align risk and control frameworks with business objectives, avoiding a compliance-only mindset.
  3. Enhancing Board-Level Awareness: Ensure leadership takes ownership of risk oversight, embedding governance at every level.
  4. Investing in Assurance & Monitoring: Leverage technology for real-time monitoring and continuous assurance to demonstrate control effectiveness.
  5. Focusing on Materiality: Prioritize controls that genuinely mitigate risk, avoiding overly complex structures.

The Road Ahead
Provision 29 marks a transformative shift in UK corporate governance. The days of box-ticking compliance are over, replaced by an integrated, accountability-driven model that values transparency, resilience, and adaptability.

Firms that act now—by embedding risk management into their strategic frameworks and fostering a governance-focused culture—will not only meet regulatory expectations but also gain a competitive edge in an increasingly complex business environment. The coming months will distinguish proactive organizations from those scrambling to react. Success will belong to those who embrace this shift as an opportunity to build more resilient, forward-thinking corporate oversight.