There is no question that risk is a top agenda item at all Board tables. There is an ever-increasing
focus on exposures with an expanding prominence of the CRO, CCO, Risk Committees and
compliance functions. The expectation that companies are far-seeing and will be adept at
sidestepping all holes in the road continues to grow. At the same time, regulations that focus on
risks expand and continue to develop.
How companies deal with risk also continues to evolve: there are new and improved control
frameworks being developed and risk “solutions” are regularly presented to companies. However,
there is no silver bullet solution for identifying and mitigating risk. It all comes down to appropriate
knowledge, focus, processes, systems of controls and ongoing consistent effort.
But what risks are at the forefront? Some will say that this depends on the company, business
sector, geography and a myriad of other specifics for each entity. But in the end, the one overriding
factor which crosses all lines is the risk to reputation. KPMG’s recent survey of Canadian general
counsel indicates that risk to reputation is believed to be the number one risk faced by companies.
As we all know, reputation is built slowly over time but can be quickly impacted. The number
two risk identified by Canadian general counsel is connected with the volume and complexity of
regulations and this risk is followed by data-related risks. It is these and other risks that, when not
well managed, will directly damage reputations. Thus, the need to identify, understand and address
each specific issue is clearly critical.
In this edition of At Risk, we focus on certain risk-related issues. In addition to sharing the
perceptions of general counsel on risk and other issues from our recent survey, we look at the
emerging regulatory issue and risk associated with conflict minerals. As Anna Cicirello explains,
while there may be a perception that this small section in the very large Dodd-Frank Act in the
US has isolated and narrow application, conflict minerals does have wide implications for many
companies outside of the US.
The topic of money laundering has received much attention in both the business and popular press
as a result of mammoth fines and penalties imposed on global banks. In Canada, the financial risk
of noncompliance with anti-money laundering (AML) regulations may be perceived as small but
reputation risk is large and growing. Candice Ramlogan writes about the Canadian AML scene and
the changes that are expected as Canada moves towards the high AML standards set in other
jurisdictions.
Finally, Stuart Horn speaks about investigating risky situations with a focus on dealing with electronic
information which is now so central to every aspect of conducting business.
In the end, there is no way to eliminate risk but being diligent in managing and controlling risk are
goals to be kept at the forefront.
Risky Business – It’s all About Reputation
By Suzanne Schulz
At Risk
© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.