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- 2006-03-22 11:27:13 作者：未知 来源：www.moneyweb.co.za 浏览次数：0 网友评论条
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Ernst & Young Risk Survey
Posted: Thu, 16 Mar 2006 11:41 | © Moneyweb Holdings Limited, 1997-2006
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- LONDON, 16 MARCH 2006 – Companies perceive a rising level of risk and plan to increase their investment in risk management over the next three years, but a lack of alignment with the strategy of their business means many are not getting the full benefits from their risk approach, says a new survey from Ernst & Young.
The global survey, Companies on Risk: the benefits of alignment, published today by Ernst & Young, one of the world’s leading professional service firms, interviewed 441 senior decision makers in large organisations in 16 countries, with the emphasis on the larger financial centres.
Jonathan Blackmore, an, Ernst & Young Risk Advisory Services Partner, says: “The world is becoming more globalised, creating tremendous opportunities for business. However, opportunities also create more risk and it is getting the correct balance between risk and reward that is the key to realising the full potential of those increased opportunities. Lack of alignment between the risk approach and the priorities of the business means many companies are not getting full value from their investment.”
The survey findings show two-thirds (67%) of companies report overall levels of risk have increased over the last 2-3 years, and a similar proportion (66%) plan to increase expenditure over the next three years. A further 42% report that gaps still exist in their coverage of key risks.
The findings also suggest that general managers do not always have a full understanding of the risk challenges in functional areas, such as tax and technology, and that greater communication is needed between senior executives and functional leaders. Only two-thirds of the senior executives questioned said that tax, technology, competitive and pricing risk are included in a formal risk assessment process.
Blackmore observes: “These numbers illustrate an increased perception of risk among companies, and a lower tolerance of surprises among investors, leading to increased investment in managing risk. The challenge is to focus that increased investment where it will add most value. At the moment there is a chance of over-engineering in some areas of the business, and a lack of senior level appreciation of the true risks in others.”
While aligning risk management with the objectives of the business is considered critical to the success of a company’s risk approach, two out of five companies have no formal processes to align risk assessment with corporate strategy. However, more than four out of five (83%) claim to have a risk culture embedded in their organisation, and nearly nine out of ten (87%) claim to educate their people about the importance of risk.
The findings suggest companies still have some distance to go to gain full value from their risk approach. It also suggests that company leaders face challenges in ensuring actions at functional level align with the overall needs of the business. Individuals need not only to recognise the risk impact of their actions but also to see the opportunities managing risk can offer and how to take advantage of them.
Although most organisations have the key building blocks of good risk management in place, they may not be realising full value from this investment. The report suggests business leaders need to leverage what is already in place by:
- Re-evaluating the current risk management approach by asking what the key risks are, what risks are covered and who is managing what?;
- Challenging whether adequate formalisation of risk management is already in place;
- Assessing the alignment between goals, risks and controls, and focusing on the risks that really matter; and
- Maintaining and building dialogue with, and across, functions to avoid gaps, overlaps and inconsistencies.
Many of the companies (20%) who report plans to increase investment identify a dedicated risk management department as the top priority, particularly for CFOs and CROs (Chief Risk Officers), followed by operational risk and strategic risk.
However, greater alignment need not mean more centralisation but does imply greater integration. The report suggests establishing a centralised risk department can help with this integration but it should not ‘own’ risk; its role and purpose must be properly defined. The focus should be on ensuring controls and processes across the business work together towards a consistent set of objectives, not on creating new levels of complexity.
Other findings from the survey include:
- The role of the CEO, CFO and wider board has been changed in terms of greater responsibility and accountability for risk and risk management.
- Risk management challenges over the next 3-5 years include a more integrated and systematic approach, clarifying ownership, and embedding a risk culture in the organisation.
- Risk management processes have positively affected working relationships by a factor of 6:1, leading to increased effectiveness in decision-making and communications, and better alignment of effort.
- Key areas for successful risk management are clear ownership of risk (77%), understanding throughout the organisation (76%), and internal mechanisms to communicate on risk (71%).
- Key areas included in a formal risk management process are operational risk (87%) compliance (laws and regulation) (86%) and financial reporting (85%).
- Investors have previously requested greater communication from companies, especially one-to-one briefings, but less than one in five businesses see this as a primary communication channel.
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