In the midst of a shaky financial climate and the tighter regulations likely as a result, it should come as no surprise that risk assessment is getting more attention from boards. A recent study by LRN determined that boards are taking a more active role in assessing risk, with 47 percent of boards at companies that conduct risk assessment involved in the process in 2008, a threefold increase over last year’s percentage.
“The fact that this figure is growing at such a rapid rate represents that boards are waking up to the importance of risk assessment,” says Mark Detelich, vice president of leadership solutions for LRN. Nearly 9 out of 10 companies surveyed conduct some form of risk assessment—the same portion as last year’s survey.
Most importantly, two-thirds of respondents shared the findings of the risk assessments with their boards and senior executives, ensuring that top leadership shared the responsibility for shaping proper business conduct.
While companies report that their programs are more robust than 2007, challenges include extending their reach internationally, perfecting the risk-detection process, and finding adequate resources to support their objectives. As to what risks companies are most apprehensive of, concerns over technology integration topped the list, with 52 percent of respondents citing electronic data protection as a concern. Data privacy was second (47 percent), followed by intellectual property risk (32 percent).
Says Detelich: “In a short period of time, technological issues have become very complex, and directors are starting to understand just how volatile this information is.”