The Resilience Statement

Original recommendation

The Brydon Review recommended that the board should make a Resilience Statement that incorporates, enhances and builds on the Going Concern and Viability Statements. (Source: Brydon 18.1.2)


The Government proposes (Section 3.1) to introduce a statutory requirement on public interest entities to publish an annual Resilience Statement, consolidating and building on the existing going concern and viability statements. The Government proposes that the Resilience Statement should be required initially of premium listed companies, in view of their existing experience of producing viability statements, and should extend to other public interest entities two years later.

The Government accepts the Brydon Review proposal that the Resilience Statement should address business resilience over the short, medium and long-term.

The short-term section of the Statement would incorporate companies’ existing going concern statement, including disclosure of any material uncertainties considered by management during their going concern assessment, which were subsequently determined not to be material after the use of significant judgement and/or the introduction of mitigating action.

The medium term section of the Statement would incorporate the existing viability statement requirements to provide an assessment of the company’s prospects and resilience, and to address matters which may threaten the company’s ability to continue in operation and meet its financial liabilities as they fall due. However, the Government proposes a mandatory assessment period of five years, rather than the three year period currently chosen by most companies who produce viability statements. The Government is keen that companies do more to evidence scenario planning and intends, at this stage, to require companies to include at least two reverse stress testing scenarios in their Resilience Statement.

The Government is also proposing to require further specific disclosures in both the short and medium-term sections of the Resilience Statement. These might include:

  • threats to liquidity, solvency and business continuity in response to a major disruptive event (such as a pandemic) which disrupts normal trading conditions;
  • supply chain resilience and any other areas of significant business dependency (e.g. on particular markets, products or services);
  • digital security risks (including both external cyber security threats, and the risk of major data breaches arising from internal lapses);
  • the business investment needs of the company to remain productive and viable;
  • the sustainability of the company’s dividend and wider distribution policy; and
  • climate change risk.

The content of the long-term section will not be prescribed but should set out what the directors of the company consider to be the main long-term challenges to the company and its business model, and how these are being addressed. These might include the impact of long-term changes in demographics, technology, consumer preferences and other identified trends on the company’s long-term business model. The Government is seeking views on whether the Resilience Statement could provide a means for companies in future to provide disclosures consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), in whole or part.

The Government’s preferred implementation route at this stage is to implement the Resilience Statement through legislation as a new section of the existing Strategic Report, supported by non-statutory guidance to be maintained by ARGA.

Government response

The Government confirms companies which are Public Interest Entities with 750 employees or more and an annual turnover of at least £750m will be required to provide a Resilience Statement.

Identification of material resilience matters

Recognising that mandating a common set of risks to be addressed in every statement would cut across the directors’ responsibility to identify, manage and report on those risk and resilience issues that are most material to their business, the Government intends to legislate for companies to report on matters that they consider a material challenge to resilience over the short and medium term, together with an explanation of how they have arrived at this judgement of materiality. In doing so, companies will be required to have regard to the following:

  • any materially significant financial liabilities or expected refinancing needs occurring during the assessment period of the short and medium term sections of the Resilience Statement;
  • the company’s operational and financial preparedness for a significant and prolonged disruption to its normal business trading;
  • significant accounting judgements or estimates contained in the company’s latest financial statements that are material to the future solvency of the company;
  • the company’s ability to manage digital security risks, including cyber security threats and the risk of significant breaches of its data protection obligations;
  • the sustainability of the company’s dividend policy;
  • any significant areas of business dependency with regard to the company’s suppliers, customers, products, contracts, services or markets which may constitute a material risk; and
  • the impact on the company’s business model of climate change, to the extent that this is not already addressed by the company in other statutory reporting.

Length of the assessment period

Following the consultation, the Government intends to replace the proposed five-year mandatory assessment period for the combined short- and medium-term sections of the Resilience Statement with an obligation on companies to choose and explain the length of the assessment period for the medium-term section.

Principal risks and uncertainties

In the interest of integrated and holistic reporting on risk and resilience, the Government intends that companies within scope be given the flexibility to report their principal risks and uncertainties within the short- and/or medium-term sections of the Resilience Statement, noting that different kinds of risk or uncertainty may crystallise or resolve over different time periods.

Reverse stress testing

The Government intends to continue with its proposal that companies within scope of the Resilience Statement should perform reverse stress testing. However, in light of the consultation feedback, companies will be required to perform at least one reverse stress test rather than a minimum of two. This means that the Resilience Statement will require a company to:

  • identify annually a combination of adverse circumstances which would cause its business plan to become unviable;
  • assess the likelihood of such a combination of circumstances occurring; and
  • summarise within the Resilience Statement the results of this assessment and any mitigating action put in place by management as a result.


Supporting guidance by the regulator will set out more detail of how the potential materiality of these matters should be considered as well as on the Resilience Statement as a whole.

Existing viability statement requirements under the Code

The intention is that the existing viability statement provision in the Code (Provision 31) will no longer apply after the Resilience Statement enters into force.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.