6 steps to manage risks and drive performance |
By Sabine Vollmer
October 21, 2015
Companies have made progress in keeping enterprise risk management top of mind, but most have yet to take all the steps necessary to identify and pursue risks that drive performance, according to EY’s 2015 global governance, risk, and compliance survey.
Of the nearly 2,000 board audit committee members, senior executives, and assurance and compliance executives who participated in the survey, 97% said their companies have made progress in linking risk management and business objectives, but only 16% considered them closely linked.
Respondents recognise the need to better identify and evaluate emerging risks and to adapt their company’s business strategy accordingly. Eighty-five per cent said opportunities exist to further improve the linkage between risk and business performance. But 77% limited their ability to adjust their business strategy to the changing risk landscape, because they evaluated their company’s risk profile annually instead of continuously.
“Companies get all tied up in identifying the risks, assigning ownership, and getting mitigation and action plans, and they forget about the education and keeping it top of mind with the people doing the work today,” said Lynn Fountain, CPA (inactive), CGMA, a consultant and former chief audit executive who is working as a contractor at Kansas City, Missouri-based accounting firm Mayer Hoffman McCann.
Companies must find ways to embed strategic thinking so that all process owners in the company understand how and when they can take advantage of risk, Fountain said. “It has to be spread throughout the organisation.”
Also, companies should be aware of other limitations, she said. For example, territorial struggles may erupt as to who should manage a risk, which would make execution of the best plans difficult.
To better take advantage of risks worth taking, to prevent counterproductive risks, and to be prepared for external risks that are outside of the company’s control, EY recommends these six steps:
Related CGMA Magazine content:
“4 Ways to Better Handle Enterprise Risk Oversight”: Surveys that focus on executives at small and mid-size enterprises suggest that many organisations have begun to strengthen their processes to handle emerging enterprise risks, but only one-third of the enterprise risk oversight programmes in the rest of the world are mature.
“Why Risk-Management Leaders Generate Higher Profits”: Executives and corporate directors believe business uncertainties and threats are increasing, a PwC survey suggests. The survey results explain how improved risk-management programmes can improve financial performance.
“Five Barriers Restricting Risk-Management Progress”: Only about 15% of companies see a strong link between their enterprise risk management (ERM) processes and their business strategy, according to a survey conducted by the ERM Initiative at North Carolina State University.
—Sabine Vollmer (svollmer@aicpa.org) is a CGMA Magazine senior editor.
https://www.cgma.org/magazine/2015/oct/manage-risks-drive-performance-201513224.html
Рубрики: | ВНУТРЕННИЙ КОНТРОЛЬ/INTERNAL CONTROL/Risk management |
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