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The most common challenges for internal functions to manage risk effectively.

Risks Confronting Boards 2016 - Managing Risks

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While we're focused heavily on directors, management and internal audit, we realize there are far more roles within operations that play a part in risk management. Directors were asked to define several varying entities' [not all within] management of key risks ranging from very well to not at all:

Roles within operations that play a part in risk management - 1Roles within operations that play a part in risk management - 2

IT security, internal auditors, external consultants, and risk management groups see double digit percentage responses in the poorly and not at all categories when asked how effectively they are managing key risks.

Further, internal auditors receive the lowest percentage in well enough out of all 8 entities coupled with having the highest percentage in not at all rating. At face value, this contradicts the internal audit question responses we received saying boards use internal audit and are mostly happy with their work.

Across all 3 board types, the external auditors see identical results with the lowest negative feedback. Only 2, 5, and 4% of public, private, and not-for-profit boards (respectively) find external auditors managing key risks either poorly or not at all; albeit the external auditors are precluded from managing their clients risk, though they often identify areas of risk and educate on best practices.

INTERNAL FUNCTIONS

We asked directors what the most common challenges are for internal functions to manage risk effectively. Although we asked in an open response format, the results were very conclusive and it is evident that certain challenges are top of mind for the directors.

Overall, the main challenges include inadequate staff size, limited resources and lack of focus/ prioritization.

Public

Even major public organizations are not immune to staffing issues:

Q:What are the most common challenges for internal functions to manage risk effectively?

Maintaining adequate In the small cap world, the biggest challenge is a lack staffing level to address of resources and/or the lack of overlapping resources risks.

DIRECTOR
Public Board
2016 EisnerAmper Survey

Maintaining adequate In the small cap world, the biggest challenge is a lack staffing level to address of resources and/or the lack of overlapping resources risks.

DIRECTOR
Public Board
2016 EisnerAmper Survey

Public boards remain concerned with cybersecurity:

Understanding fast developing technological implications.

DIRECTOR
Public Board
2016 EisnerAmper Survey

Dealing with client interface to access and provide sensitive financial information.

DIRECTOR
Public Board
2016 EisnerAmper Survey

Focus and prioritization:

Having the bandwidth to see the risks coming, being focused on more day-to-day issues, not being asked enough to focus on a specific issue.

DIRECTOR
Public Board
2016 EisnerAmper Survey

Ability to stand back and see potential crisis that could arise.

DIRECTOR
Public Board
2016 EisnerAmper Survey

Private

Private boards were mostly concerned with focus/prioritization and the lack of resources:

Time and knowledge constraints

DIRECTOR
Private Board
2016 EisnerAmper Survey

Competing priorities to run the business.

DIRECTOR
Private Board
2016 EisnerAmper Survey

Not-for-Profit

Not-for-profits are most concerned with having enough staff to fill the positions, let alone knowledgeable talent:

Insufficient resources.

DIRECTOR
Not-for-Profit Board
2016 EisnerAmper Survey

Human capital and knowledge constraints.

DIRECTOR
Not-for-Profit Board
2016 EisnerAmper Survey

Again, there seems to be a constant struggle of keeping the budgets low while trying to adequately staff these internal positions. This works against them since compensating for one risk requires spending money which potentially takes resources away from other vulnerabilities.

Next:    Cybersecurity >

Concerns About Risks Confronting Boards - 2016 Survey Results

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