The majority of global organizations in a new survey have insufficient and immature enterprise risk management (ERM) processes while risks are perceived as complicated and increasing.
The 2022 Global State of Risk Oversight: Managing the Rapidly Evolving Risk Landscape, released Sept. 27 by the AICPA, the Chartered Institute of Management Accountants and North Carolina State University, says about 60% of 747 senior finance and business leaders surveyed believe the volume and complexity of corporate risks have increased “mostly” or “extensively” over the last five years. At the same time, over two-thirds of respondents do not have complete ERM processes in place.
“Business leaders that embrace the reality that risk and return are related are likely to increase their investment in enterprise risk oversight to strengthen their organization’s resiliency and agility when navigating the complex and uncertain risk landscape,” says AICPA vice president and managing director of management accounting Ash Noah. “Organizational value goes beyond the balance sheet. Along with providing protection for businesses, embracing ERM supports the creation of value and long-term viability and sustainability.”
Among the report’s other key findings:
- Respondents in most regions noted that COVID-19 had “mostly” or “extensively” changed the nature of top risks affecting their organization – Europe and U.K. (48%), Africa and Middle East (61%), Asia and Australasia (71%), U.S. (41%).
- Most executives do not believe their organization’s risk management processes provide competitive advantage.
- About one-half of organizations outside of the U.S. describe their metrics for monitoring risks as “mostly” to “extensively” robust, while only 31% in the U.S. describe their metrics at that level.
- Most organizations throughout the world (64% in Europe and the U.K., as well as Asia and Australasia; 76% in Africa and Middle East) claim to have a standardized process for identifying risks, with the U.S. the exception at just 51%.
