KPMG: Audit Committees Worldwide Maintain Sharp Focus On Risk Management Programs
NEW YORK, Jan. 29, 2013 /PRNewswire/ — Risk management and crisis readiness continue to demand attention in boardrooms of companies across the globe, according to a new survey from KPMG of 1,800 audit committee members in 21 countries.
Globally, respondents expressed concern regarding their company’s risk management programs, with nearly half (45%) reporting that their programs required “substantial work,” and only one in four audit committee members saying they are satisfied that management is effectively managing risks to the company’s growth plans.
U.S. results to the KPMG survey were in line with those reported globally. Forty-seven percent of U.S. audit committee members who responded said that while their companies had implemented risk management systems, the programs still required substantial work. Nearly 30% of U.S. respondents said they were not satisfied with the company’s crisis readiness and response plan.
“The pace of technology change and the complexities of doing business in a global environment continue to raise the stakes on risk management and oversight,” said Dennis T. Whalen, partner in charge and executive director of KPMG’s Audit Committee Institute in the U.S. “It’s clear from our survey that directors want better information about key risks and a sharper focus on critical risks to the brand,” said Whalen.
Responses from audit committee members in the U.S. to the KPMG survey were in line with global respondents in ranking the quality of risk information related to cyber security, global systemic risk, and the pace of technology change as the lowest three among ten categories of risk.
Less than half of all global survey respondents (48%) were confident that their company’s governance activities are focused on the greatest risks to the brand. U.S. results matched global trends, with only 46% of U.S. respondents expressing satisfaction with their company’s governance activities around the risks that pose the greatest threat to the company’s reputation and brand.
Audit committee members also expressed concern about social media monitoring, with 40% of both global and U.S. respondents reporting that their company does not have an external monitoring program in place to help identify emerging risks.
Respondents also reported an increased focus on global compliance. Nearly half of the audit committee members surveyed globally said they had increased their focus on the company’s global compliance efforts in light of stepped-up enforcement of anti-bribery laws around the world, such as the U.K Bribery Act and FCPA.
Survey respondents also reported that their audit committees have primary responsibility for oversight of various risks in addition to financial reporting risk, including financial risks (79%), legal/regulatory compliance (71%), the company’s risk oversight process (58%), operational risks (49%), cyber security (38%), and technology risk (33%).
“The sharp focus on risk reflects the broad range of risks on audit committee agendas today,” said Whalen. “It’s clear that now is a pivotal time for boards to take a hard look at how they allocate risk oversight responsibilities, and whether the board has the right skills and composition to keep pace in this risk environment.”
An electronic copy of KPMG’s Global Audit Committee Survey is available here.
About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 152 countries and have 145,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
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