With 70% of respondents to our Risk and Confidence Survey regarding the current risk environment as ‘moderate to severe’, it may come as a surprise to discover risk managers are more relaxed about the risks facing businesses than any other job function, including the C-suite.
43% of risk managers believe they are operating in a low risk environment but only 26% of the C-suite agrees. When reflecting on risk levels in six months’ time, risk managers have the biggest positivity weighting.
These results may reflect either the fact that risk managers are better placed to have an in-depth knowledge of the risks facing their business and the steps the company is taking to mitigate them, or perhaps they are missing the bigger picture?
But what are the greatest risks facing businesses? With recent political upheaval around the globe political risk and uncertainty as well as economic/market risk are at the forefront of business leaders’ minds. Other risks that are increasing in significance include:
• Boardroom risk: 46% of business leaders predicted that boardroom risk - defined as risk of fraud, corruption, poor governance, weak compliance and pension exposure - will increase. Boardroom risk has the greatest predicted, which is interesting as this is the one which companies should be able to control, making it curious that they believe boardroom risk will rise. Regulatory/legislative changes such as the implementation of the General Data Protection Regulation may be leading this uncertainty.
• Supply chain risk: Despite only 8% of business leaders listing supply chain risk as the greatest risk facing their company, many business leaders discussed their concern about partner reliability, particularly along extended supply chains in emerging markets. As businesses continue to globalise and the future of the UK’s place in the European single market remains unknown, supply chain risk is likely to grow as a risk for many companies.
• Technology and Cyber risk: Whilst many business leaders see technology as an enabler of innovation – with 50% investing in technology enabled product and services - rather than a risk, it was however a top 5 risk on Aon’s recent Global Risk Management Survey. The same survey also found that the threat of disruptive technologies is anticipated to be in the top 10 risk list by 2020, and increased concerns about cyber security - especially after the recent WannaCry attack on the NHS and other institutions - means that technology and cyber have the ability to both help and hinder companies.
Anthony Williams, Chief Risk Officer
Download our Risk and Confidence Survey at http://www.cnahardy.com/pulse
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