By puncturing myth of financial firms’ risk prowess, credit crunch has increased other companies’ concerns about risks
Risk management is now the biggest concern for audit committees, having overtaken accounting as their top priority, highlighting the importance of Sarbanes-Oxley, according to a survey released today.
Only 28% of 281 audit committee members at public companies said they were “very satisfied” that audit committees understand management processes well enough to identify and assess significant business risks facing the company, according to the survey done by KPMG and the National Association of Corporate Directors. Members of NACD were surveyed between November and January.
This marks the first time that risk management ranked as the highest concern in the three years the survey has been conducted, a change that likely reflects the massive write-downs over the last year in the financial services sector. Before the credit crisis, investment banks and other Wall Street firms were viewed as leaders in the use of risk management, but the credit crisis has shown that their risks were unduly high.
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