According to the report, risk management remains primarily focused at the enterprise level. While 81% of surveyed jurisdictions have regulations or expectations requiring state-owned enterprises (SOEs) to implement risk management systems, only 41% assess the state’s overall risk exposure arising from its ownership of SOEs. As a result, interconnected, systemic or cross-cutting risks affecting several enterprises may only become visible when viewed at an aggregated level.
The OECD identifies sustainability-related risks, financial and performance risks, and corruption and integrity risks among the most significant risk categories. Corruption and integrity risks were identified as one of the top three risk priorities by 50% of respondents. By comparison, sustainability-related risks were cited by 75% and financial and performance risks by 58%.
According to the OECD, corruption and integrity risks may include bribery, fraud, nepotism and conflicts of interest. They can arise where weak internal controls, political interference or opaque decision making undermine transparency and accountability. Such vulnerabilities may be aggravated by complex procurement processes, discretionary subsidies, or non-transparent board or management appointments.
With regard to managing corruption and integrity risks, the OECD highlights the need for effective reporting and communication systems between SOEs and the state as owner, internal controls, transparency measures and accountability mechanisms. Conflict-of-interest safeguards and whistleblower protection mechanisms are also identified among the key enablers of effective portfolio-level risk management. The report further points to the need to integrate anti-corruption and integrity safeguards into policies and appointment processes.
The OECD stresses that corruption and integrity failures can undermine transparency, accountability and the legitimacy on which effective state ownership depends, while also leading to financial losses, operational inefficiencies, reputational damage and erosion of public trust. These risks are closely interconnected with other risk categories: weak governance and integrity can amplify financial losses and undermine sustainability outcomes. Overall, 79% of surveyed state owners considered that anti-corruption, integrity and sustainability risks should be addressed together as part of the same holistic framework.
To support effective portfolio-level risk management, the OECD identifies six key building blocks:
- setting clear objectives and a value focus;
- establishing governance and leadership;
- defining risk appetite and criteria;
- integrating risk management into ownership processes;
- strengthening stakeholder engagement;
- continuously monitoring, reviewing and improving the framework.
In particular, the OECD recommends designating a central risk co-ordination function within the ownership entity to consolidate and report portfolio risks, establishing clear escalation channels to senior leadership and, where appropriate, creating interagency risk committees to address systemic and cross-SOE risks. Ownership entities are also encouraged to use standardised reporting arrangements, discuss material risks and opportunities with SOE boards on a regular basis, and integrate risk considerations into decisions on investment, restructuring, capital allocation and divestment.
*The report draws on the OECD SOE Risk Management Survey covering 24 jurisdictions, interviews with ownership entities and risk management practitioners, and case studies from Canada, Greece, Israel, Peru, Singapore and the United Kingdom. It also builds on international standards and frameworks, including the OECD Guidelines on Corporate Governance of State-Owned Enterprises and the OECD Guidelines on Anti-Corruption and Integrity in State-Owned Enterprises.
