More firms are becoming aware of the need to implement strong risk management processes to protect their business, which is set to result in spending on this area rising next year.

This is according to new research from Nexia International, which found almost half of companies (48 per cent) expect to increase investment in controlling risk in 2014. It also revealed 51 per cent of firms believe the risk profile in their country has increased in the past 12 months.

Risk management is also not just a consideration for large firms, as more small and medium-sized enterprises are looking to increase their focus on protecting their operations.

Glenn Davis, partner at Nexia International member firm CohnReznick LLP, said: "Regardless of the size of the entity, the risks are broadly the same, but the ramifications are much greater for small and mid-sized organisations."

He added: "Risk management has become critically important as businesses are challenged to remain competitive while grappling with uncertain operational and financial conditions."

Although two-thirds of respondents stated they had a formal risk assessment process in place, one in three of these rated it as only partially effective or worse.

More than half of companies (57 per cent) also have yet to put in place formal training programmes to raise awareness of risk within their organisation. Even among those that do this, a third agree that their processes can be significantly improved.

On the positive side, Nexia did find there is a high level of engagement with risk management from senior executives. Some 74 per cent of respondents rated the involvement of these personnel as being effective.

Mr Davis said these results are encouraging. He added: "They demonstrate the active involvement of boards and business owners in the risk management process, providing reasonable oversight and largely engaging in discussions with the individual responsible for the risk management process."

Improving focus on risk management can have a wide range of benefits, not least the protection it can provide from market shocks. A recent study by Aon revealed firms that have invested in this area are more likely to be resilient to problems and prevent them affecting their stock price or financial results.