More than half the respondents in a recent survey said they are confident their board would be prepared to disclose how it oversees risk in order to address the SEC’s new disclosure requirements.

Henry Keizer

The survey, conducted by KPMG, polled over 1,200 board members and senior executives at a series of audit committee roundtables across the country in December. Some 70 percent of the respondents said their audit committee has primary responsibility for oversight of financial risks (including access to capital, cash flow and debt covenants), legal or regulatory compliance risk (63 percent), and IT security or privacy risks (58 percent), in addition to oversight of financial reporting. Only 18 percent said their audit committee has primary responsibility for oversight of strategic risks, suggesting that the responsibility rests with the full board.

“There’s growing recognition evidenced in our survey that risk oversight is a full board responsibility,” said KPMG global head of audit Henry Keizer. “It’s also a ‘team sport,’ involving every director and every standing committee.”

In the survey, 45 percent of the respondents expressed concern about the sustainability of the cost reductions undertaken by their companies in response to the economic crisis.

Two-thirds of the survey respondents said they were most concerned about the impact of cost-cutting on their company’s employee talent and training. Other concerns include the impact of cost-reductions on internal controls (36 percent), fraud risk (25 percent), management of outsourcing and supply chain (24 percent), financial reporting integrity (21 percent), and the Foreign Corrupt Practices Act and compliance issues (9 percent). Some 13 percent of the respondents said their organization had not implemented significant cost reductions.

The majority of board members believe their companies are prepared for better times: 68 percent said they had confidence that their company was well positioned to take advantage of an economic recovery, while 27 percent said they were somewhat confident and 5 percent said they were not confident.