Looking Ahead: Reviewing OnRisk 2021

Top Risks 2021

  • Cybersecurity
  • Third Party
  • Board Information
  • Sustainability
  • Disruptive Innovation
  • Economic & Political Volatility
  • Organizational Governance
  • Data Governance
  • Talent Management
  • Culture
  • Business Continuity & Crisis Management
  • Management respondents generally assessed risks to be less relevant to their organizations overall compared to Board and CAE respondents. The report notes this was particularly evident in regard to Organizational Governance (discussed further below) and Economic & Political Volatility. The report also noted Management respondents tended to view certain operational risks, such as Talent Management, Culture, and Business Continuity & Crisis Management, as more relevant than Board and CAE respondents.
  • Specific to Organizational Governance, as noted above, the report observed the number of Management respondents who assessed this risk as highly or extremely relevant were fewer than their Board and CAE counterparts. Additionally, Management respondents more frequently assessed personal knowledge and organizational capability for Organizational Governance as highly or extremely knowledgeable and highly or extremely capable, respectively.

Focus Areas

  • Business Continuity & Crisis Management — With 87% of Board and 93% of CAE respondents surveyed considering this risk as highly or extremely relevant, it is one of the two top-rated risks for 2021. Both Board and CAE respondents are generally aligned on an organization’s capability to address this risk, with the number of CAE respondents assessing their knowledge of the subject as highly or extremely knowledgeable slightly higher than that of their Board counterparts. Interestingly, the number of Management respondents who rated organizational capability and individual knowledge as highly or extremely capable and highly or extremely knowledgeable, respectively, was lower than their Board and CAE counterparts. For 2021, CAEs should ensure this business continuity and crisis management remains on their radar and work to better align knowledge and capability assessments amongst Management, Board, and themselves. This is an opportune time to examine successes of the past year as a result of the Covid-19 pandemic and identify areas for improvement.
  • Cybersecurity — The other top-rated risk for 2021, CAEs were generally heavily skewed in rating this risk as highly or extremely relevant compared to their Board and Management counterparts. While upwards of 90% of CAEs rated this risk as highly or extremely relevant, only 73% of Management and less than 80% of Board members surveyed assessed it as a highly or extremely relevant risk. With this disparity in assessment of relevance, it is not surprising that CAEs also rated their individual knowledge significantly higher than that of their Board and Management counterparts, with 43% of CAE respondents rating their knowledge as highly or extremely knowledgeable compared to 23% of Board and Management respondents. There is hope, however, in the alignment of assessment of organizational capability, with CAE respondents assessing their organizations as highly or extremely capable weighing in at 50%, Management respondents closely followed at 47%, and Board respondents trailed slightly behind at 40%. CAEs should continue to educate Management and the Board on emerging cybersecurity risks and continue providing independent assurance to the Board that these risks are being adequately address by their organizations.
  • Disruptive Innovation — One of two risks rated by all respondents among the most relevant, yet the number of Management respondents who assessed their individual knowledge and organizational capability as highly or extremely knowledgeable and highly or extremely capable, respectively, were among the lowest. Board respondents who assessed this risk as highly or extremely relevant was just shy of 70%, and CAE respondents just over 70%, with Management respondents at approximately 60%. Board and CAE respondents were also closely aligned when assessing organizational capability as highly or extremely capable, at 33% of Board respondents and 37% of CAE respondents, with Management respondents trailing at 20%. Conversely, the number Management and CAE respondents who assessed their individual knowledge as highly or extremely knowledgeable was 33%, with the number of Board respondents assessing their knowledge as highly or extremely knowledgeable at 43%.
  • Talent Management — With the number of Board and CAE respondents assessing this risk as highly or extremely relevant at approximately 78% and 82%, respectively, Board and CAE respondents are typically aligned on perceived relevant of talent management risk. Only approximately 68% of Management respondents deemed this risk as highly or extremely relevant. Less than 40% of respondents across all three groups assessed organizational capability as highly or extremely capable. Additionally, while 53% of Board respondents assessed their individual knowledge as highly or extremely knowledgeable, this was less so among Management and CAE respondents, at 40% and 30% respectively. With such low assessment of organizational capability and generally low assessment of individual knowledge, CAEs should work to ensure they and their teams understand the depth of talent risk and stand ready to help educate Management and the Board with the full risk picture and possible solutions.

Catholic. Dog Dad. Internal Auditor. Views expressed are my own.

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Chase Hawkins

Chase Hawkins

Catholic. Dog Dad. Internal Auditor. Views expressed are my own.

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