Reporting on its Fourth Annual Concerns About Risks Confronting Boards survey, accounting and advisory firm EisnerAmper states that other than financial risk, 73 percent of more than 230 board members (from public, private, not-for-profit and private equity boards) identified reputational risk as a primary concern, a 19 percent increase since the initial survey.
The top three reputational risks cited were product quality, liability and customer satisfaction; public perception and brand; and integrity, fraud, ethics and the Foreign Corrupt Practices Act (FCPA).
Commenting on the survey results, Steven Kreit, a partner in EisnerAmper's services to public companies practice, said, "Social media exacerbates all of the major risk categories we track--financial, regulatory and compliance, fraud, privacy and data security." He noted that "social media's immediacy turns routine challenges into enterprise risks and boards need to be ahead of the curve on digital risk management to understand these threats."
Regulatory and compliance risk ranked as a concern by 56 percent of respondents. Among regulatory risks, directors cited as their greatest concerns accounting standards, including revenue recognition, lease accounting and financial instruments, tax and the Dodd-Frank Wall Street Reform Act.
When questioned about strategic direction, 87 percent of the directors indicated the significance of focusing on internal growth and expansion.
The survey shows a continuing trend in the use of, and investment in, the internal audit process. More than 60 percent of respondents stated that...