Enhanced transparency in Zambian listed Companies: The case for risk Management and Risk Disclosure

Abstract

Corporate governance as a discipline is in its own right is a relatively new and extremely dynamic and emergent subject. It has taken prominence after the notorious collapse of several international high profile companies such as Lehman Brothers, Enron and WorldCom. One important element of corporate governance is that of risk management and risk disclosure. The management of business risk is a strategic issue which is becoming increasingly important for boards of directors and senior management. The purpose of the study is to examine whether or not the Zambian corporate governance framework has responded to the international corporate governance trend of risk management and the subsequent risk disclosure. The dissertation examines and discusses the importance of corporate governance and the governance elements of risk management and risk disclosure in relation to how they enhance transparency in listed companies. The research was conducted mainly through desk research and interviews were also conducted with key informants.The findings were that the governance element of risk and risk management are not incorporated into the Companies Act as a statutory requirement but they are found under the Lusaka Stock Exchange Corporate Governance Code ( LuSE Code) .The research further found that risk management and risk disclosure is important for listed companies because it enhances transparency and it also allows the company’s stakeholders to have a clear picture of the state of the company’s affairs, particularly in today’s volatile corporate environment. This disclosure ought to be sufficient, timely and accurate. It was observed by the author that there is more emphasis placed on financial risk disclosures as opposed to non financial risk disclosure.It can be concluded that the case for risk management and risk disclosure is an important and relevant consideration in our Zambian context and it requires that the law and policy makers in so far as corporate governance is concerned regroup in order to revise and update the LuSE Code and the Companies Act in order to keep abreast with international best practice in corporate governance reform.