Accenture 2011 Global Risk Management Study: A Source of Competitive Advantage and High Performance

It is clear from the 2011 survey that the C-suite has bought into the idea that risk management has a vital role to play in ensuring long-term competitive advantage, and ultimately high performance, in what has become a very uncertain and competitive business environment. Despite this, however, the survey also reveals serious challenges.

Accenture was able to identify a set of Risk Masters, and identifies the capabilities needed to follow their example and make risk management a lever of high performance.

Learn more about the Accenture Global Risk Management Research Report

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Watch the Global Risk Management Study Videos:

1. Key Takeaways from the Accenture Global Risk Management Study
   
   
2. Accenture Global Risk Management Study: Top Five Challenges
   
   
3. Accenture Global Risk Management Study: Top Five Findings
   
   
4. Accenture Global Risk Management Study: Key Insights for the Banking Sector
   
   
5. Accenture Global Risk Management Study: Key Regulatory Insights for Banking

Compared to the 2009 study, this study shows that risk management has moved from reactive to proactive mode. In 2009, executives were still in a state of shock in the aftermath of the global economic meltdown and risk management looked more like crisis management.

Now, comprehensive enterprise risk management programs are much more commonplace across industries and around the world. Companies are now likely to have a C-suite executive to oversee risk management, and investment has increased. In fact, leading companies are beginning to recognize that their risk management capabilities enable long-term profitable growth and sustained future profitability.

The Accenture 2011 Global Risk Management Study is based on a quantitative survey of executives from 397 companies across 10 industries. All respondents were C-level executives involved in risk management decisions at companies in Europe, the Americas and Asia Pacific. About half the companies represented had annual revenues over US $5 billion; one-quarter had revenues between US $1 billion and US $5 billion; the remaining quarter had revenues between US$ 500 million and US $1 billion.

In addition to the quantitative online survey, in-depth interviews were also conducted with 16 executives whose views are also represented in the survey findings. These interviews helped probe many of the key issues and capture lessons and perspectives of many of the leading companies in their industries. Reflections from these executives are included throughout the report.

This study identified a set of Risk Masters (about 10 percent of the companies surveyed) whose risk management capabilities are superior to those of their peers.

• Increasing volatility and growing complexity make risk management central and strategic to all industries. More than 80 percent of companies surveyed, across all industries, consider their risk area to be a key management function that helps them deal with marketplace volatility and organizational complexity.

• Executives see the risk management function as important to future profitability and long-term growth. About half the companies surveyed (49 percent) see their risk organization as a critical driver for enabling long-term profitable growth; another 42 percent see their risk management capabilities as “important” to growth.

• Companies are implementing comprehensive enterprise risk management programs. More than 80 percent of survey respondents overall have an enterprise risk management (ERM) program in place or plan to have one in the next two years. An even higher percentage of Risk Masters (90 percent) have an ERM program in existence.

• Companies are establishing C-level oversight of the risk management function. Over two-thirds of all survey respondents have a chief risk officer (CRO) operating with that title with another 20 percent fulfilling that role without the title. Executives expect their investments in risk management to increase over the next two years. Eighty-three percent of respondents see risk management investments (which include salary and benefits for risk employees, professional services, technology costs, facilities and travel) increasing in the next two years.

Although the key findings—and the insights derived from them—paint a positive picture of the importance of risk management and its potential impact on business performance, the survey also underscores deeper concerns:

• The types and magnitude of risk are increasing. Companies have growing concerns about a broader spectrum of risks, primarily relating to the supply chain, operations, regulation and reputation.

• Despite major investments to develop risk capabilities, critical exposures persist. Companies are making investments, but still more than a quarter are not measuring major risk items.

• Organizational silos are preventing effective integration of risk management structures and responsibilities. Across most types of risk, 15 to 25 percent of respondents say their risk management approach is not integrated; for around 40 percent, risk management is only “somewhat” integrated.

• Companies experience performance gaps between expectations for risk management and what is achieved. For example, 93 percent of respondents indicate that the risk organization is important as a driver for sustained future profitability, but only 76 percent say their risk organization has achieved that goal.

• Cost reduction and alignment of risk management with overall business strategy are ongoing executive concerns. The substantial investments required will only be supported if the improved risk management capabilities are aligned with business needs.

Given the large statistical sample, the Accenture 2011 Global Risk Management Study made it possible to identify a subset of Risk Masters. These Masters account for approximately 10 percent of the total survey population, and their route to mastery is neither mysterious nor impossible. There is no standard formula but, by understanding what the Masters do, others can gain insight and apply these learnings within their own organizations.

Accenture identified the following mastery capabilities:

• They raise the bar on risk management as a driver of shareholder value.
• They involve the risk organization in key decision-making processes.
• They improve the sophistication of measurement and modeling.
• They go beyond a compliance mindset to deliver complete business solutions and differentiation.
• They integrate risk management capabilities across the organization.
• They establish a dedicated risk executive with oversight and visibility across the business.
• They infuse risk awareness across the organizational culture.
• They invest in continuous improvement.

Accenture has extensive experience in helping clients develop their risk management strategies and capabilities that enable high performance.