While many Canadian organizations are concerned with risk and have a documented management plan in place, one in five do not, finds a study by CPA Canada and Financial Executives International Canada.
More than 320 financial executives from across the country participated in an online survey for the study, The State of Enterprise Risk Management in Canada.
Robust, institutionalized enterprise risk management programs are common among large and public companies, where nearly half have one in place. The percentages decline for smaller and private companies. Two-thirds of respondents say they’re only “somewhat confident” in their organization’s ability to manage risk.
The research also suggests there is a greater need for organizations to bolster oversight and operational responsibilities relating to risk. “Having a risk management program in place isn’t enough,” says Carol Raven, a CPA Canada principal in Research, Guidance and Support. “You need to be putting it into practice and ensuring you have the right people overseeing it.”
The 2008 financial crisis and high profile cases of cyberattacks on corporations reinforced the need for risk management while highlighting the threat of unexpected occurrences.
“With the speed of change in today’s economy, identifying, understanding and addressing risks in a timely fashion is critical to an organization’s success,” says Laura Pacheco, vice president, Research, FEI Canada. She adds that companies — particularly CFOs — should communicate the risks they’re worried about to their employees.
The survey also found:
· Nearly one-third of senior financial executives say their employees mostly or fully understand the risks to their organization, but the majority of respondents did say that their Board of Directors and senior management teams either mostly fully or fully understood the risks that were relevant to their organization (72% and 80%, respectively).
· When asked about the organization’s strategy being aligned to its risk appetite, most respondents felt that their companies were either fully or mostly aligned. However, 24% felt that the company’s strategy was only somewhat aligned to its risk appetite and a further 4% felt it was not very aligned at all.
Advisor’s sister publication, Canadian Insurance Top Broker, has even more about the risks companies face while doing business.