CORPORATE GOVERNANCE is keeping Australian executives awake at night, according to a recent study
CORPORATE GOVERNANCE is keeping Australian executives awake at night, according to a recent study.
“The key risk concern this year – corporate governance – reflects the sizeable regulatory burden currently facing Australian organisations and the heightened focus on directors and executives,” said Steve Nevett, national general manager, corporate risk services for Aon Australia, which conducted the study.
Top of mind are a myriad of regulatory and compliance obligations, including the impact of the Australian Stock Exchange Best Practice Recommendations on corporate governance, the US Sarbanes-Oxley Act and the introduction of International Financial Reporting Standards, he said.
“The ability to attract and retain key staff is a continuous concern for Australian executives,” according to Nevett.
“This factor, combined with an ageing workforce and with the emergence of stress as an occupational health and safety issue, will mean that workforce issues are likely to feature more prominently as key risk concerns for Australian executives over the next few years.”
The trend towards off-shoring and outsourcing as well as the reliance businesses have on external suppliers to run their own business is also an emerging risk issue, he said.
“Many companies have followed the trend towards concentrating on their core business – outsourcing and off-shoring for cost and efficiency reasons.”
Nevett questioned whether such companies have considered all their risks and dependencies and whether the implications of business interruption were factored into such business decisions.
“We are also witnessing a recurring theme – that of risk culture. Whether risk management responsibilities are centralised or decentralised, organisations have identified the need to reinforce risk frameworks and systems through the right risk culture and behaviours,” Nevett said.
Top 10 risk concerns
Corporate governance
Systems
Brand and image
Human resources
Legal
Liquidity
Information management
Business interruption
Capital structure
Lack of innovation
Source: Aon Australia's 2005/06 Risk Management and Total Cost of Insurable Risk survey
