March 6, 2007 by Canadian Underwriter
Global mining firms have ranked the implementation of enterprise risk management as a 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, a survey of 40 global mining houses, including major Canadian mining firms, shows that 29% of respondents nominated embedding risk management as the primary future challenge, says an Ernst & Young release.
While nearly twice as many companies in the mining sector (71%) than the general corporate sector (37%) say their companys attitude is to embrace risk, 61% of respondents believe that the level of risk facing the sector has increased.
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, Ian Slater, Canadian mining leader for Ernst & Young, said in a statement.
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, the report found.
While the risk processes are embedded in the business, there may be a complacency around actively managing the risks, added 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 organizations risk appetite and the level of risk in the sector.