Misaligned and Fragmented Risk Functions Jeopardizing Organizations' Performance,...

Misaligned and Fragmented Risk Functions Jeopardizing Organizations'
Performance, Says Ernst & Young

NEW YORK, Aug. 17 /PRNewswire/ -- Ninety-six percent of global organizations
today believe they have an opportunity to improve their risk management
functions. Furthermore, nearly half say committing additional resources to
risk management could create a competitive advantage, according to Ernst &
Young's Future of Risk survey, which examines organizations' attitudes toward
risk management.

The survey of more than 500 senior executives, predominately those at the
C-suite and board level, reveals the downturn is heightening awareness among
companies of the need to manage risk more effectively.

Norman Lonergan, Global Advisory Leader for Ernst & Young, said, "Although
many organizations have boosted the size and reach of their risk management
functions, this does not always equate to an increase in effectiveness. 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."

Risk management has advanced but more needs to be done

Despite improvements in risk management over the past several years,
organizations should continue to challenge their approach - especially now
when most will be asked to do more with the same or limited additional
resources. In fact, while only two percent of survey respondents plan to
decrease investments in risk management, almost two-thirds (61%) say they do
not plan to commit more resources to risk management over the next 12-24
months.

Gerry Dixon, Global Risk Leader, explained, "Recent events have forced a
maturing of risk management and many companies can take pride in the progress
they have made. However, now is not the time to become complacent. Leading
organizations recognize the continuing opportunity to improve their risk
assessments, enhance monitoring, reduce costs and better integrate information
technology."

Lack of coordination among risk functions is a threat

The survey also shows that the number of risk management functions featured in
global organizations has increased to keep up with compliance requirements.
Despite this increase, 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% of respondents indicate they have seven or more risk
functions. However, 67% have overlapping coverage among two or more risk
functions and half of those surveyed report experiencing gaps in terms of
coverage.

Dixon said, "Risk management functions within an organization often exist in
silos that are disconnected from one another and the wider business strategy.
As a result, risks identified in one area may not be communicated or
recognized by another. Moreover, different areas within an organization may
have different views on the severity or importance of certain risks."

An improved future for risk management

The survey demonstrates that companies want improved risk coverage, while
decreasing costs and improving value. Organizations aim to have their risk and
control activities aligned and coordinated.

Survey respondents also indicate that the key to making this possible lies in
the coordination of the risk and control functions as well as the business
units. This includes aligning the mandate and scope of each group,
coordinating infrastructure and people, developing consistent methods and
practices and sharing information and technology.

According to the results, survey respondents clearly recognize that risk
management provides significant benefits to their organizations beyond better
identification and understanding of key risks. Most respondents also report
benefits from improved business performance (99%), protection of business
value (98%), better decision making (98%) and improved compliance with
regulations (98%).

Dixon concluded, "Leading companies are creating a competitive advantage by
using the economic downturn as an opportunity to make practical yet valuable
improvements to the way risk is managed. More than ever, organizations need
to have a comprehensive and coordinated risk management approach with strong
executive oversight and board of director governance. The opportunity to make
those changes is now."

The full report is available at www.ey.com.

About the report
The Ernst & Young Future of Risk report is based on a survey of 507 C-suite
and board level executives in global companies - the majority with global
revenue turnover in excess of US$1 billion - across multiple industry sectors.
The survey was conducted for Ernst & Young by the Economist Intelligence Unit
in June and July 2009.

About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory
services. Worldwide, our 135,000 people are united by our shared values and an
unwavering commitment to quality. We make a difference by helping our people,
our clients and our wider communities achieve their potential.

For more information, please visit www.ey.com.

Ernst & Young refers to the global organization of member firms of Ernst &
Young Global Limited, each of which is a separate legal entity. Ernst & Young
Global Limited, a UK company limited by guarantee, does not provide services
to clients.

This news release has been issued by Ernst & Young LLP, a member firm of Ernst
& Young Global Limited.

SOURCE Ernst & Young

Sharon Byrne, Ernst & Young LLP, +1-201-872-1623, sharon.byrne@ey.com; or
Maureen Richardson, River Communications, +1-914-686-5599,
mrichardson@riverinc.com