Financial executives rank enterprise risk management (ERM) as their biggest challenge over the next 12 months, according to a report by accounting firm Crowe Chizek and Co. More than 65% of the CFOs and 70% of the audit committee members surveyed cited ERM as their No. 1 concern, overshadowing worries about improving financial reporting and internal controls.
"Executives are realizing that ERM is an important component of governance practices and is a huge challenge for those charged with managing a company's financial health," says Jonathan T. Marks, a partner at Crowe Group LLP, Crowe Chizek's parent. "Many are now looking for guidance on the next steps they should take."
While the continuing mortgage meltdown no doubt plays a role in their concerns, mergers and acquisitions as well as divestiture or restructuring topped the list of changes that would put the most strain on risk management, even more than the weakening United States' economy, says Marks.
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The three-pronged survey reached 780 CFOs, audit committee members and chief audit executives from companies in the $100 million to more than $10 billion range.
While ERM remains the top priority for the 780 CFOs, audit committee members and chief audit executives who responded to the three-pronged survey, most acknowledged that they have yet to get a handle on other, narrower risks. Less than 25 percent of senior finance executives felt that their companies were performing excellently on any risk tasks.
Other significant findings include:
? Twenty-one percent will devote "much greater" attention to company-wide risk management, with 75% saying they will pay "moderately" more attention.
? More than 30% of CFOs say they have been disrupted by financial and operational surprises in the past year.
? More than 40% say they are substantially concerned about market, financial and technology risk factors in the coming year.
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