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It suggests that organised crime is now considered more relevant to the business agenda than internal controls and fraud.

The report - Why does the strategic agenda remain elusive? - is based on interviews with 32 NEDs and audit committee members of FTSE 250 companies.

Phillip Hilling, senior partner at Ernst & Young in Yorkshire says, “The kinds of risks non-executive directors and audit committees are concerned about are increasingly global and increasingly difficult to predict and control."

“The problems that brought down Enron – particularly around internal control and fraud – seem less relevant today compared to other risks such as organised crime, and health and safety, particularly in view of recent changes in the law including the new offence of corporate manslaughter which will come into force next year.”

Participants in the report said that risk is increasingly becoming the remit of the audit committee. Hilling adds: “While it is usually the risk or compliance officers who are tasked with updating the board on what is going on, members of the audit committee are frequently being challenged to pick up on major concerns on behalf of the board.”

According to the report, the top ten risks keeping NEDs awake at night are:

• Health and safety
• Market risk
• Financial risk (including financial crime)
• Environmental
• Implementation of large complex projects
• High turnover of transactions based staff
• Pensions (particularly deficits in funds)
• Knowledge of industry
• Speed of critical decision making
• Organised crime

"A recurring theme has centred on how Non Executives execute their strategy role. An apparent lack of a consistent or effective approach across the FTSE 150 emerges," Ernst & Young's Senior Partner Gerald Russell said.

"Why do satisfactory outcomes in strategy formulation remain elusive? The only point of consensus is that good examples are found when there are strong Chairmen who make strategy a priority. This is an area which clearly deserves more in-depth evaluation and will be the focus of future studies."

"Statistics bear out that churn at the top of companies does not help with these issues. The number of FTSE 350 chairman departures increased by 60% between 2003 and 2004, which was even higher than the rate of CEO departures, and it was at the same level as CEO turnover in 2005. The current average period of tenure of a FTSE 350 chairman is five years, only marginally higher than that of CEOs (4.8 years)."

"Finding the next generation of Audit Committee Chairs is going to require both lateral thinking and a better understanding of the role. Also the sharper requirements of the European 8th Directive on competence in that a member (most likely the chairman) will need to demonstrate “Competence in accounting and/or auditing” will narrow the pool."

The full report is available as a downloadable PDF on the Ernst & Young website.