As global organizations face an increasingly complex risk environment, a enterprise risk management (ERM) report found that the majority have insufficient approaches to risk management and immature ERM processes. The report found that approximately 60% of global business leaders agree that the volume and complexity of corporate risk have increased “mostly” or “extensively” over the last five years. However, over two-thirds of respondents do not have complete ERM processes in place.
The 2022 Global State of Risk Oversight: Managing the Rapidly Evolving Risk Landscape, issued by the American Institute of CPAs (AICPA), Chartered Institute of Management Accountants (CIMA) and North Carolina State University (NC State)'s Enterprise Risk Management (ERM) Initiative, includes insights from a survey of 747 global senior business and finance leaders conducted in 2022. The survey measured executives’ assessments of the level of maturity in their organization’s proactive management of these risks through adoption of enterprise risk management processes.
Increased uncertainty and rapidly evolving events — including geopolitical shifts, supply chain disruptions, competition for talent, increased volume of available data, climate change concerns, and lingering effects of a global pandemic — are continuing to drive the complexity of risk challenges senior executives across the globe must navigate. Even when faced with these complexities of risks, only between one-third to one-half of respondents claim to have a complete ERM processes in place:
- Europe & U.K.: 33%
- Asia & Australasia: 41%
- Africa & Middle East: 29%,
- U.S.: 32%
- Global Average: 34%
“Globally, organizations face the realities of an increasingly complex risk environment while realizing their current approach to risk oversight may be insufficient in a rapidly changing risk environment,” according to Mark Beasley, KPMG Professor of Accounting and Director of the ERM Initiative at NC State. “And interestingly, even prior to the massively disruptive COVID-19 pandemic, business leaders have sensed an overwhelming volume and complexity of risks impacting their organizations. As this and our previous studies suggest, risk management does not appear to be getting easier.”
For more report findings, click here.