The business and risk landscape has evolved rapidly over the last few years, shaped by geopolitical conflict, market volatility and accelerating regulatory change. Audit committees will be expecting their company’s financial reporting, compliance, risk and internal control environment to face increased investor scrutiny in 2025.
Key pressures include economic uncertainty, the wars in Ukraine, the Middle East and Sudan, increasing cyber threats, and the preparations for climate and sustainability reporting requirements which will require developing related internal controls and disclosure controls and procedures. These developments coincide with growing investor expectations around transparency, particularly in relation to risk management, diversity, AI usage, climate risk and estimation uncertainty. The evolving UK regulatory context, including the CSRD and the potential for mandatory internal controls assurance, is prompting investors to question the robustness of corporate governance arrangements. Audit committees will need to assess whether they have the right composition, expertise and agenda focus to fulfil their core oversight responsibilities and meet rising expectations from the investor community.
Last year, one of our FTSE350 audit committee chairs survey revealed that several audit committee chairs engaged with investors less than once a year. While this may reflect current practice across the market, audit committees play a vital role in areas of oversight that are of clear interest to investors. The audit committee report remains a key source of insight, but there may be additional value in more direct dialogue between audit committees and investors where appropriate.
