Enterprise Risk Management Cited as Biggest Challenge for Financial Executives and Audit Committees

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Three surveys, with more than 780 respondents, show the increasing importance of enterprise risk management (ERM) to chief financial officers, audit committee members and chief audit executives. Crowe Chizek and Company LLC (http://www.crowechizek.com) released the surveys' results.

The common theme in the two surveys suggests the need for more collaboration between finance, audit committees and CAEs

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Three surveys, with more than 780 respondents, show the increasing importance of enterprise risk management (ERM) to chief financial officers, audit committee members and chief audit executives. Crowe Chizek and Company LLC released the surveys' results, which included participants from a broad spectrum of public and private companies, with revenues ranging from $100 million to more than $10 billion.

The surveys found that more than 65 percent of chief financial officers (CFOs) and 70 percent of audit committee members cited managing enterprise risk as the biggest challenge for their organizations over the next 12 months. According to those surveyed, ERM was considered an even bigger challenge than improving financial reporting and improving internal controls for CFOs.

"We felt that limiting the survey to just one group wasn't going to give us the whole picture," said Jonathan T. Marks, an executive with Crowe's risk services group, which was instrumental in developing the surveys. "These results showed us that enterprise risk management has become a huge challenge for those charged with managing a company's financial health, with many looking for guidance on the next steps they should take."

Although ERM was seen as the biggest challenge for CFOs and audit committees, the results also showed there is still room for improvement in the various components of understanding and managing risks. When asked about specific risk management tasks, less than 25 percent of senior finance executives felt that their company's performance was excellent on any of the tasks.

Similarly, there are challenges for audit committees regarding risk-related activities. The chief audit executive (CAE) serves as an invaluable resource for helping audit committees fulfill their responsibilities regarding risk oversight. Overall, 74 percent of audit committee members rated their CAEs as "very effective," yet less than 43 percent feel their CAE is "very effective" at conducting risk assessments, and only 41 percent give high marks to their CAEs on evaluating governance and ERM processes.

"The common theme in the two surveys suggests the need for more collaboration between finance, audit committees and CAEs," added Rick Julien, another Crowe risk service's executive involved with the survey development. "There are still many challenges on the enterprise risk management journey, including making the link between audit committees, CAEs and CFOs stronger."

Other significant findings include:

  •     Mergers and acquisitions, 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.
  •     More than 30 percent of CFOs say they have been disrupted by financial and operational surprises in the past year.
  •     More than 40 percent say they are substantially concerned about market, financial and technology risk factors during the next year.
  •     It was reported that 21 percent of the finance teams will devote much greater attention on companywide risk management, with 75 percent reporting at least moderately more.

About the Surveys
The first study, commissioned by Crowe and conducted jointly with CFO Research Services, consisted of 157 responses from senior finance executives at North American companies, with 41 percent from companies reporting more than $500 million in revenue. The second study, conducted by Crowe and Corporate Board Member, targeted public company audit committee members, consisting of 292 responses, with a broad range of demographics. The third, conducted by Crowe and the Institute of Internal Auditors' Gain Network, surveyed 334 chief audit executives on their interaction with audit committees.

For more information about the findings, or to speak with a Crowe risk services executive, please contact Jan Lippman, 312.899.8414, jan.lippman @ crowechizek.com

About Crowe Chizek and Crowe Group
Crowe Group LLP, the parent company of Crowe Chizek and Company LLC (http://www.crowechizek.com), is one of the top 10 public accounting and consulting firms in the United States. Under its core purpose of "Building Value with Values®," Crowe assists clients in reaching their goals through services ranging from assurance and financial advisory to performance, risk and tax consulting. Crowe professionals provide public and private companies with thought leadership in the financial services, healthcare, government, private equity sponsored, inventory based and not-for-profit industry sectors, among many others. With 23 offices and more than 2,500 personnel, Crowe has been recognized by a number of organizations as one of the country's best places to work. Crowe Chizek serves clients worldwide as a leading independent member of Horwath International.

Contact: Jan Lippman, 312.899.8414, jan.lippman @ crowechizek.com

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