Non-financial information (NFI) is becoming increasingly important to businesses. It's used to meet regulatory and business partner reporting requirements. It allows you to identify and measure risks so you can manage and control them better. It also gives you a richer way of communicating the performance of your business to shareholders, customers and investors.
That's why NFI is now often the lead indicator of a business's health. And why it's so important to have the capabilities and processes you need to get that information right.
Types of reporting risk
There are also risks attached to the gathering of NFI:
Sourcing risks - difficulties generating the right information
Process risks - from poor documentation to inconsistencies and errors
Monitoring risks - a lack of formal control in the process
Regulatory risks - difficulties interpreting official guidance
Multi-party relationships - sourcing data across your supply chain
Getting it right
It's vital you know what information different regulations want. You also need to provide evidence for the quality of that information. So what non-financial KPIs should be reported in the Business Review and how can your Board be confident of the reliability and completeness of the data they are based on? Third party assurance is useful here, helping you build trust between you and your regulators, business partners and consumers.
Gathering your information is, of course, fundamental. What systems are you using to generate NFI and how robust is your control environment? How is the NFI from different parts of the business consolidated and how will you make sure it's reviewed formally by an appropriate level of management?
Consolidating your NFI successfully depends to a great extent on the co-operation of suppliers. You need to consider Business-to-Business relationships (e.g. outsourcing partners) as well as Business-to-Consumer obligations (such as corporate, regulatory and legislative reporting).
You should also review the performance of all contracts and Service Levels Agreements (SLA) as well as your Corporate Social Responsibility (CRS) performance to identify areas of risk. And once again, seek third-party assurance for your findings - for solid, reliable information offers the firmest base on which to build strategies for stronger performance in the future.