Geopolitical Risks Are Primary Concern for Corporate Risk Managers

Corporate risk managers are a little less worried about global economic risks and a little more worried about international terrorism, the Chinese economy and the issue of failing states or at least that's how they felt when they responded to a survey conducted between October and November 2010 by the Society of Actuaries (SOA) and its industry partners.

Taken before the jump in oil prices, the 2010 Emerging Risks Survey is the fourth in a series of surveys, and the results indicate that while the economic category of risks was still a clear top choice among risks managers, its dominance as an emerging risk diminished. In fact, concern over economic risks decreased by seven percent since last year's survey.

By contrast, risk managers in the 2010 survey expressed growing concern over the following geopolitical emerging risks:


International terrorism (43 percent, up from 30 percent in 2009)



Chinese economic hard landing (41 percent, up from 33 percent in 2009)



Failed and failing states risks (38 percent, doubling from 18 percent in 2009)



Transnational crime and corruption (12 percent, up from seven percent in 2009)



Retrenchment from globalization (25 percent, up from 18 percent in 2009)

"The world of geopolitical risk is rising, and that impacted the survey responses," said Max Rudolph, FSA, CERA, CFA, MAAA, owner of Rudolph Financial Consulting LLC and proprietor of the survey. "As actuaries, who make a living out of analyzing risk, we believe comprehensive and integrated risk management practices help prepare a company to succeed across a variety of potential scenarios with focus on both mitigation and optimization. That's why it is critical for businesses to consider implementing an enterprise risk management strategy to hedge against potential unforeseen business risks."

The full survey results are available at http://www.soa.org/files/pdf/research-2010-emerging-risk-survey.pdf.