The UK Government has published guidance on its ‘Corporate reporting: The Draft Companies (Strategic Report and Directors’ Report) (Amendment) Regulations 2023’. These have a strong focus on resilience and will ‘be debated in Parliament in due course’.
The new regulations will, if approved by Parliament, create new corporate reporting requirements for very large UK companies (defined in the regulations as companies with 750 employees or more, and an annual turnover of £750 million or more).
Resilience-related requirements will include:
- A resilience statement, to be included in the annual strategic corporate report, in which companies in scope must explain the steps they are taking to build or maintain their business resilience over the short, medium and long term. Items included in the resilience statement will need to include a summary of the company’s strategic approach to managing risk and how it is building or maintaining business resilience. The resilience statement will also need to describe the principal risks that the directors consider could provide a threat to the company’s operational or financial resilience over the short to medium term, and explaining how such risks are being managed.
- Reporting on an ‘annual reverse stress test’, which needs to identify adverse circumstances that could cause the company’s business plan to become unviable. Companies must give details of any mitigating actions put in place in light of the exercise.