ERM News - Deloitte's 2013 Strategic Risk Survey Reveals Interesting Findings From 300+ Corporations
Deloitte's recently published report found that "Reputation" is the number one enterprise risk today.
In a recent study, Deloitte uncovered significant evidence that many other businesses around the world are also adopting a new view of the risk universe. The study, conducted in the spring of 2013 by Forbes Insights, on behalf of Deloitte, was a global survey of strategic risk management practices at more than 300 major companies around the world. In the survey, Deloitte wanted to better understand how businesses can manage strategic risk more effectively – both now and in the future. The survey explored a wide range of issues and questions, including:
To what extent are companies considering and addressing risks when developing and evaluating their business strategies?
What new risks do their strategies create?
Which strategic risks are critical to avoid – or essential to take?
What is the strategic impact of new technologies, and which investments are essential to managing risks and exploiting new opportunities?
Also, even if a company's strategy is executed flawlessly, what other risks could undermine the business?
Focus areas of the survey included the alignment of strategy and risk, monitoring strategic investments, and emerging views of strategic risk management. While some findings reinforced what many already believe, there were also some surprises. Here are a few of Deloitte's key findings:
- Strategic risk has become a major focus, with 81% of surveyed companies now explicitly managing strategic risk – rather than limiting their focus to traditional risk areas such as operational, financial and compliance risk. Also, many companies are taking a broad view of strategic risk that doesn't just focus on challenges that might cause a particular strategy to fail, but on any major risks that could affect a company's long-term positioning and performance.
- A key improvement is that more and more companies are integrating strategic risk analysis into their overall business strategy and planning processes – and the integration seems to be working. Among the companies surveyed, 61% now believe their risk management programs are performing at least adequately in supporting the development and execution of business strategy.
- Strategic risk management is a CEO and board-level priority. Two thirds (67%) of the surveyed companies say the CEO, board or board risk committee has oversight when it comes to managing strategic risk.
- Reputation risk is now the biggest risk concern, due in large measure to the rise of social media, which enables instantaneous global communications that make it harder for companies to control how they are perceived in the marketplace.
- Other technologies are also having a major impact on the business and risk landscape. The majority of surveyed companies (53%) believe technology enablers and disrupters such as social, mobile, and big data could threaten their established business models, and 91% have changed their business strategies since those technologies began to emerge. The technologies have had their biggest impact in three sectors: TMT (97%), C&IP (96%), and Life Sciences (94%). Regionally, the biggest impact was in Asia/Pacific, where 98% of respondents report having changed their business strategies.
- Three years from now, human capital and the innovation pipeline are expected to be the top strategic assets that businesses will need to invest in.