Small and mid-sized businesses are set to invest more in risk management in the face of growing business risks, according to a new report by independent accounting and consulting firm Nexia International.
Nexia’s Global Risk Management Survey of 73 companies and more than 40 advisory firms worldwide shows that nearly half (48 percent) of companies surveyed expect to increase spending on risk management in the coming year.
“Risk management has become critically important as businesses are challenged to remain competitive while grappling with uncertain operational and financial conditions,” Glenn Davis, partner at Nexia International member firm CohnReznick LLP, said in a statement.
In other key survey findings, more than half (51 percent) of the companies think the risk profile in their country has increased in the last year; compliance and operational risks were ranked as the most significant; two-thirds (67 percent) of the companies have a formal risk assessment process in place; 57 percent of companies have yet to put a formal risk management training program in place; and 38 percent of companies say risk tolerances are only reviewed annually or less frequently.
Overall, the companies surveyed ranked compliance and operational risk as the most significant risks facing their businesses. Respondents indicated that they are least prepared to deal with social media, succession planning, and natural or man-made disasters. Respondents also highlighted the risks surrounding global expansion as a key area.
“Regardless of the size of the entity, the risks are broadly the same, but the ramifications are much greater for small and mid-sized organizations,” Davis said.
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