Managing global risks
The global economic uncertainty brought about as a result of the euro-zone debt crisis has affected corporations around the world.
Many perceive it to be the biggest risk facing companies this year.
A study by Big Four accounting firm PwC shows that almost three-quarters of the poll of 1,530 chief audit executives and stakeholders, including audit committee chairs, say that economic uncertainty is hurting companies and is the biggest threat facing them.
PwC's 2012 State of the Internal Audit Profession Study reveals that businesses are calling for internal auditors to broaden and deepen their role in helping navigate the rapidly changing risk landscape across a range of risks, including data privacy and security, and regulation and government policies.
Jim Woods, PwC China and Hong Kong risk and controls leader, says that as the risk landscape continually evolves and more is expected from the internal audit function, most business leaders surveyed say they are not comfortable with how their risks are being managed, although 74 per cent of those surveyed have formal enterprise risk-management processes.
Woods says that to deliver what stakeholders want, it is clear the standard for an effective internal audit function has been raised, making it essential for the function to elevate its performance. 'Businesses must evaluate their total enterprise risk, co-ordinate with the internal audit function and break down organisational barriers to provide a holistic approach to risk management,' he says.
Woods believes that in Hong Kong and the mainland, as more stakeholders seek an objective point of view to more effectively manage global risks, internal audit groups are turning to external expert providers to better help them respond to growing risks.
The survey was conducted in the fourth quarter of last year and the first quarter of 2012, and includes respondents in 16 industry sectors from 64 countries.
This year, in addition to surveying internal auditors about the state or the profession, PwC surveyed the profession from the outside in, asking chief financial officers, audit committee directors, CEOs, and other stakeholders to share their views on internal audit's role in the organisation and its capabilities for supporting the risk management.
The survey revealed that internal audit groups at leading firms provide stakeholders with advice on how to improve risks and controls rather than just reporting on gaps.