Rarely has there been a greater need for transparency into the nature and magnitude of risks undertaken in executing an organization’s corporate strategy than today.
To provide perspectives about potential risks in 2013, Protiviti and North Carolina State University’s ERM Initiative surveyed more than 200 business executives to obtain their views about those risks that in 2013 may significantly affect profitability and funding objectives of their organizations.
Overall, most executives rate the business environment as significantly risky.
Listen here to our webinar presented by North Carolina State's Professor Mark Beasley, and Protiviti's Executive Vice President Carol Beaumier and Managing Director Jim DeLoach.
Because of the rapid pace of change in the global business environment, executives and boards of directors can benefit from a periodic assessment of risks on the horizon to best position their organizations for a proactive versus reactive response to risks that emerge and potentially impact their ability to achieve profitability and funding objectives.
Following are some suggested questions that executives and boards should consider as they evaluate their risk assessment process:
Is management periodically evaluating changes in the business environment to identify the risks inherent in the corporate strategy? Is the board sufficiently involved in the process, particularly when such changes involve acquisition of new businesses, entry into new markets, the introduction of new products or alteration of key assumptions underlying the strategy?
Does management apprise the board in a timely manner of significant risks or significant changes in the organization’s risk profile? Is there a process for identifying emerging risks? Does it result in consideration of response plans on a timely basis?
Is the board aware of the most critical risks facing the company? Does the board agree on why these risks are significant? Do directors understand the organization’s responses to these risks? Is there an enterprisewide process in place that directors can point to that answers these questions and is that process informing the board’s risk oversight?
- Is there a periodic board-level dialogue regarding management’s appetite for risk and whether the organization’s risk profile is consistent with that risk appetite? Is the board satisfied that the strategy-setting process appropriately considers a substantive assessment of the risks the enterprise is taking on as it formulates and executes its strategy?
These and other questions can assist organizations in defining their organization’s specific risks.
We hope this report provides important insights about perceived risks on the horizon for 2013 and provides a catalyst for an updated assessment of risks and risk management capabilities within organizations.