A new report from AICPA explores what businesses leaders think about current enterprise risk management practices.
The 2023 State of Risk Oversight report from the American Institute of Certified Public Accountants (AICPA) and NCSU Poole College of Management covers enterprise risk management strategies and trends for various industries.
The report features input from 454 business leaders, covering everything from enhanced risk management, leadership, identification and assessment, risk monitoring processes, among other factors impacting ERM trends. Here are some of the five key insights for senior management:
- Risk management practices can’t keep up with ever-changing business environment.
- Stakeholders are pressuring management to elevate approaches to anticipating and managing risks.
- Disconnect between risk management and strategic oversight
- There’s room to enhance risk metrics
- Risk Governance is important for full board of directors, but often delegated to sub-committees.
“Managing risks before they occur and in the context of what is strategically important can provide incredible competitive advantage, if done so more effectively than others in the marketplace,” said Mark S. Beasley and Bruce C. Branson, co-authors of the report. “This occurs by strengthening their organizations’ processes surrounding the identification, assessment, management, and monitoring of risks most likely to impact–both positively and negatively–the entity’s strategic success.”
Call To Action
At the end of report, professionals are prompted to consider the following questions when updating risk management plans:
- What are management’s perceptions about the current approach to risk management?
- Is there consensus about the most significant enterprise risks?
- How is the output from risk management used in strategic planning?
- Does management have access to robust key risk indicators?
- Is our entity sufficiently prepared to manage a significant risk event?