"The point to stress to business leaders is that they cannot afford to be complacent about the subject of compliance and risk to their businesses as they need to validate that they are able to demonstrate good governance and transparency in terms of compliance," says John Lovelock, chief executive of FAST IiS .

"The research points to critical weaknesses that leave their organisations with material risk -- and put bluntly that means a risk to the bottom line."

There are over 20 pieces of legislation that affect the software that companies own, including the Computer Misuse Act, the Data Protection Act and the , with penalties of up to 10 years in jail for the most flagrant breaches of copyright.

In practice, the biggest risk that most users face is that they will be audited by a software supplier and charged for using software in a way that they were not entitled. Audits, which are part of the licence agreements for all software, involve a visit from an auditor to inspect the records that a company holds about its software.

Preparing for audits and maintaining records over the long term is an administrative task that involves gathering evidence that licences have been paid for and software has been installed. This may involve holding paper invoices and the original wrappings of the disks on which software was supplied.