Adjusting to the new world of risk management
Deloitte/Forbes Insights Executive Survey
2012 Risk management survey of the technology, media, telecommunications, life sciences, consumer and industrial products sectors
Since the onset of the global financial crisis, companies globally have continued to experience massive disruptions within their businesses. Moreover many expect this volatility to not only continue but increase.
Conducted in early 2012 this joint Deloitte and Forbes Insights survey of senior executives across the TMT, life sciences and Consumer/Industrial products sectors in the US outlines the dimensions of this expectation. Two-thirds of respondents identified financial risk as having the potential to be even more volatile over the next three years. More than half indicated they expect risks ranging from regulatory to technology to geopolitical/political concerns would also increase in volatility over the next three years. In response, a stunning 91% plan to reorganise and reprioritise their approaches to risk management in some form during that time.
While US-based the Deloitte/Forbes Insights survey mirrors findings in the Australian context. 40% of Australian Audit Committee Chairs who responded to Deloitte’s recent Audit Committee Effectiveness Survey identified risk as one of their top three issues over the next 12 to 24 months and there is clear evidence that a number of ASX100 organisations are embarking on projects – often sponsored or lead by the CEO and Board – to overhaul their risk management processes.
A number of the other top-level findings from the Deloitte/Forbes Insights survey merit attention from Australian Consumer/Industrial products, TMT, and Life Science and health care readers, particularly with respect to trending risks as well as changes in approaches to risk management. Social media, for example, is ranked among the top five risks by more than one quarter of respondents when almost unrated five years ago. Likewise traditional compliance-based approaches to managing risk are no longer seen to hit the mark: some 28% of those surveyed indicate ‘people are unaware of what they need to do concerning risk’. Identifying where risks currently lie and how well they are being managed is one thing; responding to looming risks and anticipating what they could be five or even ten years down the track is seen to require another approach entirely.