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Risk management after an IPO-A public company new risks - EY - Global

Risk management after an IPO

A public company’s new risks

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Public company risk universe


Public company risk universe
It is easy to underestimate the level of accountability and scrutiny the business will have to deal with.

Once the IPO is completed, the executive team has to shift focus from the risks and opportunities created by the IPO process to the new challenges and expectations facing the business now that it is public.

It is easy to underestimate the level of accountability and scrutiny the business will have to deal with. Securities regulators, governments, public stock exchanges, activist groups and shareholders will all have their own demands; responding to them in the right way will become part of daily life.

The business needs to adapt to this environment quickly. If executives become bogged down dealing with unforeseen risks, the business will find it harder to capitalize on the opportunities created by the IPO.

In the months directly after an IPO, executive resources are likely to be stretched as senior people focus on implementing their new strategic plans. Nevertheless, the ability to identify and manage risk is a vital element of success.




It is easy to underestimate the level of accountability and scrutiny the business will have to deal with.



A public company operates in a new risk universe. Failure to manage these new risks can have serious consequences. At best, failure will distract senior executives from their core goals; at worse, the demise of the business may result.


Public company risk universe


Public company risk universe

Stakeholders need proof

After an IPO, management accountability can shift from a handful of investors to thousands of new stakeholders and owners. Investors want to feel confident that the company understands the risks it faces and proof that risks are being properly mitigated and that the internal control structure is sound.

The company must strike the right balance between keeping risks within acceptable limits and pursuing profitable opportunities as vigorously as possible.

If the company is taking significant risks with investors’ capital, it needs to compensate them with adequate returns. Investors value good risk management.

What our research shows

  • Four out of five investors would pay a premium for companies with a successful approach to risk management
  • Two-thirds of investors said they would avoid a company if they felt its risk management was not good enough
  • One-half of investors said they had sold shares in a company because they decided its risk management framework was weak


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