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

Key Takeaways

• Provision 29 mandates transparency: Boards must declare the effectiveness of risk management and internal controls by 2025.
• Not a UK version of SOX: Unlike U.S. regulations, UK CGC emphasizes continuous, proactive risk oversight rather than financial control attestation.
• Siloed risk knowledge is a major challenge: Organizations are struggling to centralize and integrate risk management efforts across departments.
• Embedding risk into business strategy is critical: Firms need to align governance practices with operational objectives to avoid a compliance-only approach.
• Investor trust hinges on transparency: Clear, detailed reporting will be key to maintaining credibility with regulators and stakeholders.

Deep Dive

With the Financial Reporting Council's revised UK Corporate Governance Code (UK CGC) taking effect on January 1, 2025, companies are under increasing pressure to align their risk management and internal control frameworks with the new requirements. While most of the 2024 Code applies from this date, Provision 29—the requirement for boards to formally declare the effectiveness of their risk frameworks—will not take effect until January 1, 2026. This phased approach has prompted widespread discussion among compliance professionals, corporate leaders, and risk strategists, who must juggle immediate governance updates with long-term readiness for one of the Code’s most significant provisions.

My recent article providing on-the-ground insights from global governance experts captures the urgency surrounding this transition. Professionals attending my recent workshops in London, Utrecht, and Stockholm have been deep in conversation about how best to navigate the revised expectations.

Provision 29: Shaping the Future of Risk Management

While some have likened the changes to the U.S. Sarbanes-Oxley (SOX) Act, experts emphasize that the UK framework is distinct. Rather than focusing on compliance-driven financial controls, UK CGC emphasizes proactive and continuous risk oversight.

One UK bank executive, reflecting on recent discussions, shared, “Provision 29 is reshaping our governance strategy. Readiness means pinpointing our most critical controls, ensuring board disclosures on effectiveness, and maintaining industry alignment to avoid falling behind. Assurance will be key, particularly in evolving risk areas like cyber and third-party oversight.”

A smaller UK-based firm echoed this sentiment, highlighting the value of workshops in preparing for the transition, “The workshop provided fresh perspectives on integrating risk and control frameworks into our business model. We’re now thinking more strategically about governance rather than viewing it as a compliance task.”

What’s Keeping Risk Leaders Awake?

Governance and risk professionals have been vocal about the challenges associated with Provision 29. During one of my London-based workshops, a collective “risk insomnia” list emerged, outlining key worries:

• Fragmented Risk Ownership – Many organizations still lack a unified approach, with risk knowledge trapped in silos.
• Weak Governance Culture – Effective risk oversight depends on strong board leadership and a clearly defined risk culture.
• Unclear Definitions of “Ineffective” Risk Management – Many firms struggle to articulate what constitutes a failing control system.
• Complexity & Bureaucracy – Compliance fatigue threatens to burden businesses with unnecessary red tape.
• Cyber & Emerging Risk Gaps – Boards must demonstrate that they are proactively managing evolving threats, not just reacting to them.
• Accountability & Buy-In – Ensuring risk is embedded across all business functions remains an uphill battle for many firms.

How Firms Can Adapt

To successfully navigate Provision 29, businesses must shift from a compliance-driven mindset to a strategic, risk-based approach. Key actions include:

• Dismantling Risk Silos – Firms must foster cross-departmental collaboration, ensuring risk is an enterprise-wide effort rather than an isolated compliance function.
• Embedding Governance into Business Strategy – Risk and control frameworks should be integrated into strategic decision-making, not treated as separate compliance exercises.
• Enhancing Board-Level Risk Awareness – Leadership teams must take ownership of risk oversight, ensuring governance is embedded at every level.
• Investing in Assurance & Real-Time Monitoring – Technology-driven monitoring and continuous assurance will be essential for demonstrating control effectiveness.
• Focusing on Materiality & Relevance – Overly complex control structures can be counterproductive. Organizations must prioritize controls that genuinely mitigate risk.

Provision 29 signals a significant transformation in how UK firms approach governance. The era of box-ticking compliance is fading, replaced by a more integrated, accountability-driven model that rewards transparency, resilience, and adaptability.

Companies that act now—by embedding risk management into their strategic frameworks and fostering a culture of governance—will not only meet regulatory expectations but also gain a critical advantage in an increasingly complex business landscape. The coming months will separate firms that proactively strengthen their governance models from those scrambling to react. Success will belong to those who use this shift as a catalyst for more resilient, forward-thinking corporate oversight.

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