Accenture, the global management consulting firm, recently released the findings from their 2013 Global Risk Management Study titled Risk management for an era of greater uncertainty.
Nearly 450 senior executives from both the public and private sector, across the globe, were surveyed to gather insights on how they and their risk management function are helping to respond to today’s volatile, uncertain, competitive, and highly regulated macro-economic environment.
Compared to the findings of the 2009 and 2011 global risk management studies, the perception of risk management among senior management is changing for the better.
There has been a tremendous perception shift of risk management from a compliance box-ticking activity as well as a source of competitive advantage to risk management becoming increasingly integrated and connected in various ways throughout organizations.
According to the study, 98% of the surveyed executives reported an increase in the perceived importance of risk management at their organization.
Risk management is now being seen as an enabler of business strategy execution. The proportion of surveyed organizations having a CRO, either with or without the formal title, has risen from 78% in 2011 to a near-universal 96% in 2013.
Other findings from the study include the alignment of risk management with strategy and other decision-making processes such as budgeting and forecasting and investment/disinvestment. In today’s volatile economic, fixed budgets are now a thing of the past.
In order to drive business performance, organizations must be proactive and make use of rolling forecasts and perform ‘what-if” analysis on their decision making processes. Steering the organization ahead and for growth requires business leaders to understand and mitigate the different types of risks that can ultimately lead to disaster in some form.
Although risk management is still gaining popularity across the organization, there is still a considerable amount of skilled talent, especially in the areas of risk technology and regulatory change.
To curb these skills shortages, some of the surveyed organizations are increasingly using innovative techniques , such as rotational training and combining risk and strategy roles, to help improve these qualities as well as to help improve retention rates in an increasingly competitive talent market.
As the volume of data continues to increase, organizations must be able to develop capabilities that turn data into insights. This means taking advantage of technological developments and embed analytics into their management processes.
This calls for an improvement in data quality and the development of risk and performance dashboards that are insightful and lead to positive action that delivers organizational and shareholder value.
Although some organizations have made great strides in enhancing their risk management capabilities, there is still much room for improvement. To help reach their risk capability goals, the study recommend organizations take the following actions:
1. Treat risk as a “people game,” developing risk staff with business acumen.
If the risk management function is to play its elevated role more effectively, it increasingly will rely on risk staff with a deep understanding of the broader business.
2. Look ahead, as new types of risks are relentless, and develop capabilities that match tomorrow’s risks.
Risk capability plans should aim to be at least in concert with the organization’s business development plans, and often should be leading, rather than lagging.
3. Manage regulation through a transformational lens.
Many industries are being forced to rethink their business models, processes, reporting and data structures to better enable effective regulatory solutions. Seeking the opportunities to align these efforts with the business change agenda can lessen future complexity.
4. Focus on insight, not just data and analytics, and develop the “human element” of risk technology.
It is important not to miss the forest for the trees: technology, data, and analytics can only have value if their insights can be put into action.
More information on the report can be found here.