Survey shows corporate risks are going unhedged

Two-thirds of senior executives at US companies are not satisfied that their company has successfully identified and managed all their significant business risks, according to a recent joint report by Andersen and Financial Executives International.

In the poll of more than 400 major US companies, 65% of respondents reported that they did not have “high confidence” that their firms’ risk management system was comprehensive.

“Businesses are facing an increasing number of risks in a complex global economy,” said James deLoach, Andersen’s global leader of strategic and enterprise risk services. “Top executives are increasingly concerned about the uncertainties they face in their business.”

About half the poll’s respondents said they had made substantial revisions to their risk management capabilities in the last two years, with the same number planning to revise present risk management systems over the next three years.

Meanwhile, Andersen is blaming US accounting rules for its failure to include Enron’s off-balance sheet irregularities. Facing industry criticism for its recent favourable audit of the energy company prior to its collapse, Andersen’s chief executive, Joe Berardino, claimed outdated accountancy regulations are at fault.