Internal audit executives at some of the world’s leading organisations now understand the contribution they make to enterprise risk management.
In a report by Protiviti, audit executives from top companies speak candidly about their paths to better financial results through risk management.
Protiviti’s new edition of “Internal Auditing Around the World” reveal how some audit executives transformed enterprise risk management (ERM) from concept to reality.
“At no time in recent memory have sound ERM principles been more critical for business success – however, ERM can’t just be a ‘tick the box’ exercise,” said Bob Hirth, Protiviti executive vice president and leader of the firm’s global internal audit and financial controls practice. “Internal audit can, should and must play a strong role in an ERM strategy. Internal audit teams understand the contribution they make to the ERM process.”
The new publication profiles 10 international companies that have seen positive bottom-line results because of a deep commitment to ERM. Their stories reveal a common theme: regular communication with senior management is pivotal to ERM success.
They also highlight how organizations from a broad group of industries tackle such key risk management areas as regulatory compliance, managing financial risks, establishing specific risk programs, coordinating ERM with corporate strategies, and redefining risk methodologies.
One featured company, Hyatt, took the idea of regular ERM communication with senior leadership a step further with the development of its Risk Council a diverse group of executives ranging from finance and technology executives to heads of human resources and public relations.
Hyatt Vice President of Internal Audit Jim Werner likens the Risk Council to the United Nations, where representatives come with concerns about their respective areas and leave with pertinent information that they communicate to their groups.
“Everyone feels our approach is very helpful,” he says. “This has been both a learning and teaching experience. Our challenges are that we’re trying to educate people, while at the same time keeping them focused on our most significant areas of risk."
Another featured organisation, Luxottica Group, a premium eyewear company, used a formal risk assessment as a springboard to a structured ERM approach.
The company views ERM as a critical tool that supports the senior management team through its strategic decision process, helping the organisation to reach its goals and create sustainable value for all stakeholders. This process also helps the leadership team understand the primary and various perceived risks to the organisation.
“When you finally have all the key players in the same room, the discussion is interesting,” said Luca Fadda, Luxottica’s vice president of internal audit. “Everyone has different viewpoints and information with regard to the business process.”
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