Adjusting to the new world of risk management
Following the latest global economic crisis, many business risks are still in a state of flux – and so are companies’ efforts to manage them, according to a new survey by Deloitte and Forbes Insights. A stunning 91% of companies plan to reorganize and reprioritize their risk management approaches in the next three years, as leaders strive to prepare their organizations for what many expect will remain a volatile, highly changeable risk environment.
Aftershock: Adjusting to the new world of risk management offers a glimpse into risk management’s anticipated future direction among 192 U.S. executives from companies in the consumer and industrial products, life sciences, health care, and technology, media, telecommunications and industries. Among the findings:
- Leaders expect risk to become more volatile. 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 that they believe that risks ranging from regulatory to technology to geopolitical/political concerns would increase in volatility over the next three years.
- Technology is a frequent focus of improvement. More than half of the respondents said that their companies planned to invest in continuous risk monitoring. Almost a third said that they were in the process of automating risk reporting.
- Social media risk rivals financial risk as an area of concern. Twenty-seven percent of respondents identified social media as one of the most important sources of risk over the next three years – the same percentage that said the same about financial risk.
- Lack of awareness is the most common barrier to effectiveness. Twenty-eight percent of respondents said that their main risk management challenge was that "people are unaware of what they need to do concerning risk,” more than the percentage citing any other factor.
- Risk management now lives in the C-Suite. Twenty-six percent of respondents, a plurality, pointed to the CEO as the executive with primary responsibility for overall risk management; 23 percent named the CFO/Treasurer. Only 19 percent named the CRO/Head of Risk.
- Risk management budgets are frugal, but not stingy. About half of the respondents expected only minimal changes to risk management budgets for all risk categories. However, fewer than 15% of respondents across all risk areas thought that risk budgets would decrease over the next three years.