Risk management is a key capability for insurers—after all, we’re in the business of managing risk. But in the wake of the economic downturn, there is growing recognition across all industries that risk management can be a forward-looking process that enables long term growth, supports future profitability and creates a competitive advantage.
The Accenture 2011 Global Risk Management Study, one of the largest risk surveys ever conducted, is based on interviews with C-suite executives from 397 companies across 10 industries. There is a separate report for insurance companies that I’ll discuss in next week’s post.
In addition to determining attitudes and strategies for risk management, we identified the Risk Masters. Risk Masters make up approximately 10 percent of the survey respondents and demonstrate excellence in risk management that is superior to their peers. I’ll describe the unique capabilities of the Risk Masters in two weeks.
The survey paints a positive picture of the role of risk management, which is becoming more comprehensive across different types of risks and better integrated into corporate functions. Consider:
- More than 80 percent of survey respondents consider their risk area to be a key management function that helps them deal with marketplace volatility and organizational complexity.
- About half the companies surveyed view their risk organization as a critical driver of long-term profitable growth, while an additional 42 percent see their risk management capabilities as “important” to growth.
- Risk management is becoming more of a C-suite activity. Compared to 2009, more companies are appointing a chief risk officer (CRO) or its equivalent.
- More than 80 percent of survey respondents have an enterprise risk management (ERM) program in place, or plan to have one in the next two years.
While the survey demonstrates that risk management is an increasingly important priority for all businesses, there are challenges on the horizon. For example, while companies are making investments in risk management capabilities, more than a quarter of them are not measuring major risk items. Furthermore, organizational silos continue to impede effective risk management across the enterprise. The major challenges facing risk management over the next three years are:
- Reducing costs.
- Aligning with the overall business strategy.
- Implementing regulatory demands.
Learn more about the Accenture 2011 Global Risk Management Study or learn more at the Accenture Risk Management microsite.