Embedding Risk Management Key Challenge for Mining Firms

    Risk culture next step for mining sector - Ernst & Young report

    TORONTO, March 5 /CNW/ - The world's largest mining houses believe
embedding risk management throughout their organizations is the key risk
challenge in the next three to five years, a new Ernst & Young report has
revealed. Attitudes to Risk in the Global Mining Sector - an Ernst & Young
survey of most of the top 40 global mining houses, including major Canadian
mining firms - shows the most respondents, 29%, nominated embedding risk
management as the key future challenge. The report on the global mining
companies follows from a survey of more than 400 corporate leaders on their
attitudes to risk and a study of more than 130 major investors.
    Although the surveys show mining companies have a more comprehensive risk
coverage approach compared to the general corporate sector, establishing a
"risk culture" remains a challenge.
    "Operationalizing risk management is the single biggest challenge facing
mining companies," said Canadian mining leader for Ernst & Young, Ian Slater.
"The nature of the mining business is inherently risky, so to be successful
companies have had to be proactive in dealing with risk - in terms of both
minimizing threats and maximizing opportunities for competitive advantage."
    Despite comprehensive coverage, 55% of mining companies say some key
risks are not being actively managed, including 18% that reported their
environmental risks were under-managed. "While the risk processes are embedded
in the business, there may be a level of complacency around actively managing
the risks," said Mr. Slater. "To find the gaps, mining houses should integrate
and align existing processes to their strategy, and seek to fill these
shortfalls. They need to ensure their culture supports their organization's
risk appetite and the level of risk in the sector."
    Key findings include the following:

    -   61% of respondents say the level of risk has increased;
    -   Nearly twice as many companies in the mining sector (71%) - compared
        to the general corporate sector (37%) - say their company's attitude
        is to embrace risk;
    -   CEOs, CFOs and the wider Board now have greater accountability,
        involvement and focus on risk; however, there are fewer Chief Risk
        Officers (CROs) in mining companies compared to the general corporate
        sector as these roles are incorporated in the roles of business unit
    -   Mining companies have more comprehensive risk coverage with a broader
        range of risk categories included in their formal risk assessments
        compared to the general corporate sector;
    -   Nearly a third of mining companies - compared to just 10% in the
        general corporate sector - believe investment in risk management will
        increase 40% or more in the next three years, and;
    -   Only half the mining companies surveyed have a specific policy on
        communicating risk management to major investors and other
        stakeholders, despite earlier research that shows investors apply a
        penalty if they think risk management is insufficient.

    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 centred 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
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 clients.

For further information:

For further information: Nichola Petts, Media Relations, Ernst & Young,
(416) 941-1813, nichola.petts@ca.ey.com

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