Are the risks that matter understood? – Ernst & Young study
Thursday, 15 October 2009 — Australia October 2009: In summary, Ernst & Young’s Future of Risk survey findings suggest that Australian companies are better positioned from a risk management perspective than many global companies, but there is still a long way to go.
Rob Perry, Oceania Risk Leader for Ernst & Young explains, “The strategic risk coverage of Australian companies is broader than the operational and financial risk approach that many other countries focus on. However, now is not the time to become complacent. Leading organisations recognise the continuing opportunity to: improve their risk assessments; enhance monitoring; reduce costs; and better integrate information technology.”
The survey of more than 500 senior executives, predominately those at the C-suite and Board level, reveals the economic downturn is heightening awareness among companies of the need to manage risk more effectively.
The survey examined organisations’ attitudes toward risk management and nearly half of the respondents say that committing additional resources to risk management could create a competitive advantage.
Perry says, “The research demonstrates a consistent theme both globally and here in Australia, most organisations (96%) believe they have the opportunity to improve their risk management functions.”
Better positioned but a long way to go
In Australia, 40% strongly agree that their risk functions effectively coordinate with each other compared to 11% of global companies having this view. Overall, 68% of organisations in Australia believe strategic risk has increased compared to 37% of global companies with many global organisations (46%) seeing no change.
IT risk could be strengthened in Australia
The survey also reveals that Information Technology (IT) risk in Australia including: IT management; security; and availability, could be strengthened. For example in Australia only 28% of organisations indicated that IT risk was effectively managed compared with 46% globally.
Greater activity at Board level
Survey respondents clearly recognise that risk management provides significant benefits to their organisations beyond identification and understanding of key risks. Most respondents report benefits including: improved business performance (99%); protection of business value (98%); better decision making (98%) and improved compliance with regulations (98%).
Perry concluded, “Leading Australian companies have better coordinated risk functions. However, they need to ensure they have a comprehensive and coordinated risk management approach with strong Board involvement. This will ensure risks that effect shareholder value goals are properly managed, monitored, and mitigated.”
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About the report
The Ernst & Young 'Future of Risk' report is based on a survey of 507 C-suite and Board level executives in global companies – the majority with global revenue turnover in excess of US$1 billion – across multiple industry sectors. The survey was conducted for Ernst & Young by the Economist Intelligence Unit in June and July 2009.
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