Currently, organisations are facing numerous challenges and opportunities across several business dimensions, some of which include embracing new technologies to improve operational efficiencies and the change in utilisation or deployment of human resources where employees are now working remotely from different locations. These opportunities and challenges bring about new sets of emerging risks that organisations need to take into consideration. The approach to managing these emerging risks has been adapted to ensure that organisations remain relevant during these unprecedented times
The responsibilities of audit committees continue to grow with the new challenges that are arising. Apart from the audit committee’s role and responsibility in assisting the Board in overseeing internal financial control, regulatory and compliance processes, risk oversight will continue to form a critical part of the audit committee agenda.
To gain a thorough understanding of how management has identified these emerging risks and how they are being managed and reported, audit committees should consider asking the following:
- What approaches are management adopting to identify emerging risks, internal and external, that can disrupt the organisation's strategy?
- How are the identified emerging risks considered and incorporated into the existing risk framework?
- How have recent events impacted the significant risks that have been reported, and what are the significant movements in the current risk profile?
- What is the extent of emerging risks that have been identified as once-off events, and what is the probability of future occurrence? Has management documented adequate action response plans to deal with future events?
- Are all relevant stakeholders informed in a timely manner regarding emerging risks?
- Are key risks appropriately allocated across the Board and its committees for oversight purposes?