Partner Article
Executives call for risk management reform
Risk management in UK businesses is not as watertight as it should be, according to a survey of KPMG audit committee members.
In the UK, 39% of respondents to KMPG’s survey said their risk management strategy requires “substantial work” to bring it up to a satisfactory standard.
Online safety was a major issue for British firms, as 80% of audit committee members were dissatisfied with the information given to them surrounding cyber security.
Rapid developments in technology and social media have prompted executives to call for greater flexiblity in risk management processes, since current systems have been unable to cope with the fast-changing business environment.
Timothy Copnell, KPMG’s chair of the UK Audit Committee Institute, commented: “Considering how dramatically technology, globalisation and government regulation are reshaping the business and risk environment, we’re not surprised to see significant concerns about risk and compliance.”
Internationally, one fifth of companies do not annually evaluate their auditors, while many executives expressed concerns that annual reports are not “understandable.”
Somewhat shockingly, only 56% of UK respondents said they have complete confidence in their annual reports, however KPMG said higher numbers were happy their reports were “fair” and “accurate.”
Further to these findings, approximately 25% said their understanding of “key assumptions” around management’s accounting information could be deeper.
Mr Copnell continued: “Audit committees are still coming to terms with the higher regulatory expectations placed upon them and the ever-increasing range of risk oversight falling within their remit. The challenges of keeping ahead in a fast-moving risk environment are clear.”
The issues raised in KPMG’s report are being combated, as two thirds of UK audit committees said they have re-evaluated their effectiveness.
However this could cause a “talent war” across the country as businesses fight over the best and most diverse employees to help their companies improve.
Mr Copnell added: “While there is a high degree of satisfaction in many areas, the percentages are not comfortably strong and highlight some unsettling truths – such as the 71% of respondents that aren’t wholly convinced that dissenting views on risk and control are actually heard.
“A committee is only as good as the people on it. Whilst committees are generally satisfied that they are doing a good job, the challenges produced by the prolonged downturn and the difficulty of keeping up to speed with a whole range of new developments and technologies means that a committee with greater diversity of thinking, background, perspective and experience is likely to be best equipped for the future. We could see a war for talent emerging.”
This was posted in Bdaily's Members' News section by Miranda Dobson .
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