Corporate risk management has moved up the corporate agenda and is now considered a key to competitive advantage, according to a new report by Accenture.
Among the 397 executives participating in the 2011 study, 80 percent said that the increasing volatility and complexity of the economic and financial environment have elevated the importance of risk management as a key management function. In addition:
85 percent reported that risk has become a driver of competitive advantage for their company.
Nearly half (49 percent) believe that corporate risk management will enhance the likelihood of long-term profitable growth for their company. About the same number (48 percent) said it will support sustainable future profitability.
Unfortunately, though, companies remain unprepared for today's risky business environment despite considerable investment in risk management capabilities.
More than half (52 percent) of the survey respondents said their individual company has invested $25 million or more since 2009 to improve risk management capabilities, and one in 10 said their company's investment has exceeded $250 million. But, a whopping 83 percent said additional investments would be made in risk management in the next two years as their companies navigate market volatility, manage increased complexity and address a proliferation of risks, including:
other operational issues
cyber- based crime.
"The best companies are not just improving risk management; they are using it to gain competitive advantage as they integrate their risk function and include it in strategic planning for a more proactive approach to decision making," said Steve Culp, managing director of the Accenture Risk Management consulting service line. "As a result, new business opportunities are being pursued with a clearer view of the potential upside and downside, and executives are better able to engage in contingency planning to respond more effectively when risks become issues."
More details are available in the report, titled Risk Management as a Source of Competitive Advantage and High Performance, Accenture 2011 Global Risk Management Study.