How can the risk team optimise IPO preparations?

3 min read
Jan 13, 2022

When a company is preparing for an initial public offering (IPO) there are strategies the risk team can take to ensure the organisation communicates its story and frameworks to the outside world in a clear, compelling and accurate way.

Download now [Case Study]: Creating a risk integrated system for real-time decision making

The backbone of a trusted, reliable and sought-after organisation – also known as a robust risk management framework.

The risk team are the star players to present an organisation’s risk management framework in the best light to prospective investors. Whether your organisation is preparing for an initial public offering (IPO) or it simply wants to sophisticate and become more mature, taking things to the next level is no small matter that can be accomplished overnight.

Risk Leadership Network has developed an in-depth paper outlining some of the key steps a risk team can take ahead of their company going public. It is based on discussions with practicing risk leaders who have been through the process of helping their company launch a successful IPO.

This complements the series of collaborative member meetings members are taking advantage of where leaders can discuss, off-the-record, the major risk management challenges and their solutions (the role of risk in IPO preparations is just one series of many in which members are collaborating).

Of course, a large part of IPO preparation is getting the business ready to meet new regulatory and legal requirements – this often includes the requirement to report their risks annually to investors. Members are making use of our Risk Reporting Comparison Tool to accelerate the risk reporting process, seeing how other listed companies report their risks and benchmarking their approach to others.

Here are some of the major activities highlighted in the paper that risk teams can and should undertake during the IPO preparation process:

1) Fine-tune the fundamentals

A robust risk framework is one of the major strengths many organisations will have developed in advance of an IPO launching. By having the right systems, processes and people in place (and people who are fully aware of their risk responsibilities), an organisation can detail these measures in its prospectus. Outlining the company’s risk management framework and being able to fully explain this part of the business to prospective investors should boost confidence in the organisation. (Check out our latest blog on how members are redesigning their governance models.)

2) Make it agile

The risk framework must also be constantly monitored and adjusted to continue to boost the organisation’s risk maturity over time - and potential investors must be able to see evidence of that. Again, being able to show these investors that a strong, agile framework is in place helps to boost external confidence in the organisation, increasing its value in the eyes of the market.

3) Enhance your data storage

While it is possible to prepare for an IPO without a virtual data room, using this kind of application can ease the process of gathering, verifying and storing vital IPO information and evidence. This is an important element of the IPO preparation process because all information provided to investors in the prospectus must be backed up by strong evidence based on quality data from the business.

4) Use your best resources

The risk team is often able to provide a more overarching view of the organisation than other executives who may be focused on one business unit or division. Make full use of this invaluable perspective when it comes to reviewing the prospectus and associated evidence.

5) Monitor the wider picture

Preparing for an IPO takes time and markets will continue to move as you undertake this activity. As such, it’s important to monitor the external environment - your own industry, as well as the wider world - for any developments or changes that could affect investors’ view of your organisation. Similarly, keep an eye on other IPOs as you prepare, to gain insight into the current thinking of investors or regulators. You may want to address any changes or new insights in your prospectus – changes might even impact the timing you choose for your IPO. (To help with their horizon scanning, members are making the most of our Emerging Risk Tool.)

Risk Leadership Network members can access more detail on these issues in the full article, as well as benefit from our extensive portfolio of case studies, how-tos, tools and templates. To access this, and other articles, as well as a range of other content and opportunities to join meetings with your peers to discuss the major issues affecting your business, find out more about our approach here

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