Businesses seem to have forgotten lessons of the past and are still falling short with their risk management processes, says the world’s largest professional body of management accountants.
UK-based body the Chartered Institute of Management Accountants (CIMA) commissioned a study which found that 70% of executives worldwide felt their firm’s risk management measures were not “mature”.
About 60% of the 1,300 executives quizzed by researchers from the North Carolina State University, who carried out the study, said they were less than content about the way information regarding top risk exposures was reported to senior management.
Gillian Lees, CIMA’s head of research and development, suggested she was not surprised to hear of dissatisfaction from its members in relation to risk management, but she had hoped the disquiet of the last ten years would have changed businesses’ perception of risk.
She said: “The wider business world needs to hear this call. As we near a decade from a global crash triggered by poor understanding of risks, it’s depressing to see how little has changed. This is the equivalent of not bothering to lock your house after a burglary.”
What can companies do?
Lees explained that by identifying possible threats, firms can secure their future and even give themselves a competitive advantage. Failure to do so, however, means “sleepwalking towards disaster”.
With only 35% of organisations claiming to have a definitive enterprise risk management (ERM) system in place, Mark Beasley, one of the paper’s authors, said the findings indicate how too few businesses have developed formal risk management structures.
He stressed that firms should waste no time in putting this right, “so they can increase the business’ agility in navigating challenges that may impact strategic success”.
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