KARACHI: Neglecting formal risk management processes destroying businesses and most of the processes are not mature in all over the world, revealed a new study.
The study was conducted by the Enterprise Risk Management Initiative at the North Carolina State University on behalf of the Chartered Institute of Management Accountants (CIMA).
The report’s authors consulted more than 1,300 executives worldwide and found that 70% felt their risk management process was not ‘mature’. Just 40% are satisfied with reporting of information about top risk exposures to the senior management. CIMA’s head of research and development Gillian Lees said, “When we ask our members to list their current topics of focus, ‘better risk management’ is always near the top.
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. Identifying possible threats to a business is essential for securing the firm’s future. Adapting to future risks and changes can give a company a competitive advantage. Failing to do either means sleepwalking towards disaster.” The report looked at ERM, a commonly accepted framework to identify and prepare for future threats to an organisation’s core business model and strategic plan.
Unfortunately, ERM take-up was poor around the world, with only 35% of organisations claiming to have a formal ERM system in place. 80% of firms have not invested in risk management training for executives in last few years.
