Large U.S. companies have improved their ability to identify and manage potentially critical business risks, but they still have a way to go, according to the 2007 Protiviti U.S. Risk Barometer study. The study -- which polled 150 senior-level executives, half of whom were CEOs or CFOs, divided equally between Fortune 1000 and Fortune 2000 companies -- found that 53 percent of respondents rated their firms as very effective at managing risk, a 15 percent rise compared to last year. Still, 53 percent of participants said their companies could improve the risk management function.
"Having now completed three years of Sarbanes-Oxley compliance, it's increasingly clear that the largest U.S. companies are finally focusing on other risks beyond regulatory and compliance-related issues," said James Pajakowski, managing director and leader of business risk solutions for Protiviti, in a release. While competitor risk was ranked as the top risk category across all industries, the financial industry pegged the financial markets as its top risk. Customer satisfaction, the regulatory environment, information systems and IT security, and changing markets rounded out the top five biggest perceived cross-industry risks.
According to the survey, those firms most effective at managing risk are most likely to use the following risk management best practices:
• Rigorously deploy a formal risk management policy, risk assessment process, and risk monitoring and reporting process across the organization.
• Formally integrate risk assessment processes and risk responses with the activities of the business-planning and strategy-setting processes.
• Quantify risk and evaluate their risk profile.
• Assign to a chief risk officer (or an equivalent executive) the primary responsibility for coordinating risk management policy, execution and reporting.Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio