Almost two-thirds of companies in a recent survey by Ernst & Young say they do not plan to commit more resources to risk management over the next 12 to 24 months, despite the problems uncovered by the financial crisis.
The survey found that only 2 percent of the 507 senior executives polled plan to decrease risk management investments, however. The number of risk management functions in global organizations has increased to keep up with compliance requirements, but the coverage and focus of these areas have become both increasingly difficult to manage and are compounded by a lack of alignment. For example, 73 percent of the respondents indicated they have seven or more risk functions, while 67 percent said they have overlapping coverage among two or more risk functions. Half of those surveyed reported gaps in coverage.
Although many organizations have boosted the size and reach of their risk management functions, this does not always equate to an increase in effectiveness, said Ernst & Young global advisory leader Norman Lonergan. In fact, too few organizations can claim that shared reporting, data exchange and coordination consistently occurs among their various risk management functions. In the end, this only leaves the organization more vulnerable to the threat of risk.
The complete Future of Risk report is available at www.ey.com.
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