Accenture’s 2009 Global Risk Management Study has found that executives at business enterprises across a wide range of industries believe overwhelmingly that they need to overhaul their approach to risk management.
Tony Cunningham, managing director of ICT-focused business compliance company, Wynleigh International, said risk management is still only given a “token amount of recognition – and is not taken seriously enough”.
A snapshot of the results of the Accenture survey of 260 chief financial officers, chief risk officers and others responsible for corporate risk in 21 countries seemingly show just how much work needs to be done to ensure a better level of risk management.
“This is a major issue for companies around the globe. Some, at least, are recognizing the need for solid risk management. But, unfortunately too many companies just pay lip service to this need.”
According to Accenture after the last big downturn, in 2002, businesses attempted to adjust their risk exposure by strengthening their internal controls and improving their financial transparency.
‘Today’s world definitely requires much stronger fixes than just twiddling finance and accounting practices,” said Cunningham. “Businesses definitely need to fundamentally change their approach in order to change their core risk processes. In South Africa, this should not only apply to listed companies, it should also apply to non-listed, private ones – even smaller private companies.
The Accenture survey shows why proper risk management is of paramount importance. Only around half of the respondents said their company’s risk-management function was significantly involved in strategic planning (48%) and in investment and divestment decisions (45%). Worryingly, a lowly 27% said that risk-management function played a significant role in setting objectives and managing performance.
Moreover, the Accenture report points out that the increasing cost of risk management is by itself reason enough to improve the process.