Growth brings opportunities, but it also changes an organisation’s risks. Arrangements that once worked well may become less effective as an organisation takes on more people, customers, systems and suppliers.
This was the focus of a review published by the Financial Conduct Authority (FCA) in August 2026. The FCA examined 15 high-growth companies across asset management, wealth management and payments to assess whether their governance, risk management and controls were keeping pace. [1]
The widely used OECD definition describes a high-growth business at the beginning of a three-year period with an average annualised growth of at least 20% in either employment or turnover during that period. [2] However, organisations can also undergo significant change through new products, markets, acquisitions, technology or increased reliance on suppliers. In identifying companies for its review, the FCA considered indicators including changes in revenue and expenditure, staff growth and changes in regulatory permissions or control of the company. [1]
Although the review focused on financial services, the FCA noted that its findings may also be relevant to organisations in other sectors undergoing growth or significant change. [1]
When existing governance and controls begin to strain
The FCA found that stronger companies had clear governance structures, defined responsibilities, regular oversight of risk and compliance, useful management information and properly documented decisions and actions. [1]
In other organisations, governance and controls had not kept pace. Responsibilities were concentrated among too few people, independent challenge was limited and meeting records were incomplete. Some firms also relied heavily on key individuals, without sufficient succession planning or knowledge sharing. Policies and controls had not always been updated as business models, customers, suppliers and technology changed. [1]
What worked previously may no longer be enough as the organisation grows.
Boards and senior management should check that responsibilities remain clear, risk management has sufficient resources and the information they receive reflects how the organisation operates today.
Do people and resources support growth?
The FCA found that stronger companies invested in recruitment and training as they grew. They also strengthened their compliance functions and prepared early for regulatory and legal changes. [1]
As workloads increase and risks change, existing roles can become overstretched. Responsibilities need to remain manageable, key roles need suitable cover, and employees need the training and information required to do their jobs.
The Financial Reporting Council’s (FRC) guidance accompanying the UK Corporate Governance Code is aimed at companies applying the Code, but raises a question relevant to any board: does the organisation, including its outsourced providers, have the knowledge, skills and tools needed to achieve its objectives and manage risk effectively? [3]
The FCA also identified cases where companies delayed moving into new regulated activities until their existing controls were more robust. [1] Before expanding, organisations should consider whether they have sufficient capacity and expertise, clear ownership of new risks and realistic plans for managing additional demand.
If people, skills or oversight are already under pressure, further growth is likely to magnify the problem.
Can the systems cope?
The FCA found that stronger organisations invested in technology that could scale with the business. Stronger practices also included recognised security standards and penetration testing, while evidence of effective change control was among the areas requiring improvement. [1]
More broadly, existing systems may struggle as transaction volumes, user numbers or services increase. Slow performance, manual workarounds and recurring errors can be early signs that capacity is being stretched.
Before expanding, organisations should consider whether their systems have sufficient capacity, whether changes are properly tested and whether critical services can be recovered following a failure.
Can the organisation afford to grow?
Growth often requires investment in people, technology, premises or suppliers before the expected income is received. Organisations should therefore test their plans against scenarios such as slower growth, rising costs or the loss of an important customer.
This can help management understand whether growth is affordable, when additional funding may be needed and what action could be taken if performance falls below expectations.
What are customers experiencing?
As demand increases, service quality can decline before the effect becomes clear in financial results. Rising complaints, missed deadlines, errors or falling customer satisfaction may indicate that capacity and controls are not keeping pace.
Organisations should monitor these indicators and act where growth is beginning to affect the quality, suitability or reliability of what they provide.
Sustainable growth requires effective governance and controls
An organisation cannot assess growth solely through revenue, customer numbers or market reach. It must also ask whether its governance, people, systems and finances can cope with the resulting change.
The warning signs may emerge gradually. Responsibilities become less clear, key employees are stretched, manual workarounds increase and customer service begins to suffer. Individually, these issues may appear manageable. Together, they can show that the organisation has outgrown parts of its governance and control environment.
Boards and senior management need to identify these pressures early and decide what must change before further expansion. Internal audit or other independent assurance can assess whether governance and controls remain appropriate for the organisation’s current size, complexity and risks. This can help identify weaknesses before they undermine future growth.
Sources
[1] Financial Conduct Authority, High-growth organisations: good and poor practice, published 10 August 2026:
https://www.fca.org.uk/publications/good-and-poor-practice/high-growth-firms
[2] Organisation for Economic Co-operation and Development, Understanding Company Growth: Helping SMEs Scale Up, 2021:
https://www.oecd.org/en/publications/understanding-firm-growth_fc60b04c-en/full-report/component-4.html
[3] Financial Reporting Council, Corporate Governance Code Guidance, updated 3 June 2026:
https://www.frc.org.uk/library/standards-codes-policy/corporate-governance/corporate-governance-code-guidance/
