The 2023 Global State of Risk Oversight: Managing the Rapidly Evolving Risk Landscape, published jointly by AICPA, CIMA and NC State’s Enterprise Risk Management Initiative has identified what it describes as a worrying immaturity of ERM processes and a lack of understanding by executives and boards of the strategic value of an effective risk oversight process. At the same time the research showed a significant increase in the level and complexity of risks their organizations are facing.
The report found that 68 percent of respondents sense volume and complexities of risk increasing. However, only 31 percent describe their organization’s risk oversight practices as ‘mature’ or ‘robust’.
Key findings from the report include:
- The lack of focus on risk oversight in organizations may be attributed to only 20 percent of organizations having embedded risk management incentives in their compensation plans.
- The volume and complexity of risks is increasing across the four geographic regions: Europe & UK (66 percent), Asia & Australasia (81 percent), Africa & Middle East (78 percent), US (65 percent).
- In all regions of the world, respondents who claimed their organizations had mature or robust risk oversight are in the minority: Europe (38 percent), Asia & Australasia (19 percent), Africa & Middle East (29 percent), US (29 percent).
- Only 44 percent of organizations describe their enterprise risk management process as a ‘mostly’ to ‘extensively’ systematic, robust, and repeatable process with regular reporting of top risk exposures to the board: regionally this was broken down as Europe (51 percent), Asia & Australasia (46 percent), Africa & Middle East (43 percent), and US (37 percent).
- Most executives do not believe their organization’s risk management processes provide competitive advantage. By region this was: Europe (15 percent), Asia & Australasia (23 percent), Africa & Middle East (40 percent), US (11 percent).
The 2023 Global State of Risk Oversight: Managing the Rapidly Evolving Risk Landscape includes insights from a survey of 983 global senior finance and business leaders conducted in 2023.
