COVID-19 puts business risks under a new spotlight
Compared to last year, we’ve seen a big increase in concerns around remaining solvent in 2021.....
As coronavirus continues to disrupt the corporate landscape, a new survey suggests businesses across the UK, Ireland and the rest of Europe have significantly shifted their attitudes towards risk. The Chartered IIA’s annual Risk in Focus 2021 report, published today, tracks the risks facing organisations year-on-year as ranked by 579 Chief Audit Executives (CAEs).
For the third year running, cybersecurity has topped the list of risks, with almost four in five (79%) businesses citing it as one of the major risks they face. More than a quarter (27%) singled cybersecurity out as the number one risk, amid a heightened awareness of the IT and security threats posed by widespread remote working, including an increase in phishing attempts and malware infections.
The report also points to ongoing concerns around companies’ ability to remain solvent as the world enters a recession. Amid depressed demand, financial, capital and liquidity risks have jumped up the agenda, with more than two in five (42%) of those surveyed including these within their top five risks – a 40% increase on last year.
Other key findings from Risk in Focus 2021 include the following:
- Disasters and crisis preparedness was cited as a top five risk by over a third of CAEs (34%), this was a new risk included for the first time in this year’s survey and reflects the increased focus on crisis management and business resilience as a result of the coronavirus.
- Bribery, fraud and other financial crime was cited by 25% of CAEs as a top five risk, a notable 19% increase on the 21% who said that same a year ago.
- Managing talent, staff wellbeing and diversity challenges has risen up the agenda, with more than one in three (35%) citing ‘Human capital and talent management’ as a top five risk, compared with around one in four (27%) who said the same a year ago.
- Health and safety saw a 70% year-on-year increase in the numbers of businesses citing it as a priority. Almost one in five participants (17%) said it was a top five risk, compared with only 10% a year ago.
- 22% of CAEs cited ‘Climate change and environmental sustainability’ as one of their company’s top five risks, a more than 50% increase on the 14% who said the same in last year’s Risk in Focus survey. Growing awareness of environmental concerns, highlighted nearly half of audit chiefs (41%) saying they expect it to be a priority risk three years from now. But despite this, only 6% of audit chiefs citing climate change as one of the top areas to spend time and effort on.
- With growing uncertainty on whether the UK can agree a trade deal with the EU following Brexit, 33% of CAEs said that ‘Macroeconomic and geopolitical uncertainty’ was a top five risk, an increase on the 29% who said the same a year ago.
John Wood, Chief Executive of the Chartered IIA commented:
“Businesses are operating in extraordinary times and have had to adapt to new challenges this year like never before. Coronavirus has exacerbated existing risks, forcing organisations to think from completely new angles or assign new levels of priority to them.
Cybersecurity is a case in point. Though a perennial front-of-mind risk for boards, the rise in remote working means cybersecurity issues have taken on a new dimension and IT infrastructure has had to adapt in record time.
“The longer-term implications of this exceptional scenario are still unclear, but we should expect disruption to continue into next year and beyond. Internal audit can and should help organisations manage these new challenges by identifying their blind spots and opportunities to improve their operations.”
Risk in Focus 2021 sets out a series of recommendations for how organisations can tackle these risks including:
- Protect against cybersecurity threats by introducing new IT protocols suited to the remote working environment, ensuring workers know how to spot cybercrime and avoid succumbing to phishing and spear phishing.
- Address short-term financial risks via holistic assessment of enterprise-level operations (such as manufacturing, sales, advertising and marketing activities) to reveal areas to significantly improve efficiencies by driving up revenue and bringing down costs.
- Work with internal audit function to analyse business operations for gaps and inefficiencies that can be closed to deliver savings – as well as the knock-on effects and disruptive costs of any restructuring programme.
The full report is available below.
For more information visit: www.iia.org.uk
For more Finance & Investment news follow i-invest Online.
- UK ranks second in G7 economies for economic impact of entrepreneurshipThe beta launch of the Shopify Entrepreneurship Index shows that British entrepreneurs generated over £28 billion worth of business activity in 2022. According to the index, entrepreneurs on Shopify in the UK grew their exports by 8% in the last year – valued at over…
- How businesses can futureproof their AI strategiesGetting ahead of the UK Government’s AI whitepaper On the 29th March 2023, the UK Government released its plans to balance AI risks with innovation, taking its first step to harnessing the true potential of the technology. The AI regulation whitepaper follows growing concerns around the…
- The trading partner you can trustWhether you’re just starting out, or moving to the next level, award-winning broker FairMarkets provides a safe, fair, and transparent trading environment Offering a whole range of products available across the biggest financial markets, including CFDs on forex, commodities, indices, stocks, and cryptocurrencies, FairMarkets International…
- How much should my outsourced IT service cost?When looking for the best IT service provider, weigh up your requirements and remember, you get what you pay for, says Tim Downs, Director of Bitwise-IT A question I get asked a lot is, how much does a managed IT service cost? The answer is of course,…
- Unlocking Britain’s digital potentialWith the UK ready to bet on burgeoning technologies such as AI, 5G, and IoT tools, a solid digital infrastructure has never been more important, says Finbarr Toesland Hardly a month goes by without the news of a new technological development that is heralded to be…