TORONTO, Oct. 24 /CNW/ - Business investment in emerging markets
continues to boom, but many Canadian companies are failing to manage risk
effectively according to a global survey by professional services provider
Ernst & Young.
"It is surprising to have 60 percent of Canadian companies with no
emerging market risk management strategy in place," explained Carol Willson,
Executive Director, Risk Advisory Services, Ernst & Young. "Canadian companies
investing in emerging markets, such as China, Brazil and India, need to focus
on risk exposure or they will miss business opportunities."
According to the study, only 46 percent of Canadian companies admit their
board of directors are involved in managing risk in emerging market ventures.
That's compared to 53% of global respondents who participated in the survey.
"A clear risk management strategy driven by corporate leadership will
help the business manage risk and allocate resources more effectively and
improve the quality of controls, processes and communications," Willson said.
"Canadian companies must develop and implement overarching risk management
strategies for their entire organization, starting with leadership."
For Risk Management in Emerging Markets, Ernst & Young interviewed more
than 900 senior executives responsible for risk management in either
international headquarters or emerging market operations. The survey shows
developed market companies are more likely to worry about political risks (40
percent), whereas emerging market businesses focus on more immediate risks
such as market and competitive risk (41 percent), and currency (28 percent).
However, this risk concern does not translate into consistent risk
management strategies. Over half (56 percent) of developed market companies
say they have no strategy in place to manage risk in emerging markets.
Surprisingly, North American companies are the least likely to have a strategy
in place to manage risk in emerging markets (only 25 percent have a strategy
compared to 46 percent in Europe and 52 percent in the Far East).
About Risk Management in Emerging Markets
The survey interviewed 435 large multinational companies with
headquarters in 12 developed countries, with 1342 links with emerging
companies. There were also interviews with 501 companies in the emerging
markets of Brazil, Russia, India, China and Turkey. Of these 220 were
subsidiaries of developed market companies, 190 were joint venture, third
party agents or intermediaries, and major suppliers to foreign companies, and
91 were leading businesses within the emerging markets.
About Ernst & Young
Ernst & Young, a global leader in professional services, is committed to
restoring the public's trust in professional services firms and in the quality
of financial reporting. Its 114,000 people in 140 countries pursue the highest
levels of integrity, quality, and professionalism in providing a range of
sophisticated services centered on our core competencies of auditing,
accounting, tax, and transactions. Further information about Ernst & Young and
its approach to a variety of business issues can be found at
www.ey.com/perspectives. Ernst & Young refers to the global organization of
member firms of Ernst & Young Global Limited, each of which is a separate
legal entity. Ernst & Young Global Limited does not provide services to
For further information:
For further information: on this study and insight on the key factors
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