The 2021 Global Risk Management Study marks the seventh edition of this signature piece of research which explores how risk management professionals and their functions are responding to the challenges created by an evolving and disruptive risk space and where emerging and often intertwined threats create new challenges but also opportunities for forward thinking companies.
For this year’s global study, we surveyed over 700 risk professionals from the Banking, Capital Markets, Comms and Media, Energy, Insurance, Life Sciences, Utilities and Software & Platforms sectors.
Better preparation leads to faster execution.
Yet more complexity
Complex. Volatile. Fast-paced. These are all words we used to describe the risk landscape two years ago when writing this report. These descriptions ring even more true today than they did then.
Whether it be supply-chain disruptions, the impacts of cyber attacks, challenges of virtual working, or unstable market demand, the recent volatility has intensified and reshaped many risks that businesses face. What new risks will the gradual return to the office entail? What new extreme weather events will climate change cause? And will consumers’ expectations and behaviors, which changed so significantly at the height of COVID-19, switch again as the pandemic finally recedes?
It’s no wonder 77% of risk leaders believe that complex, interconnected new risks are emerging at a more rapid pace than ever before. Today’s risk functions are encountering unforeseen threats with increasing frequency.
Technology-equipped and highly skilled risk teams allow their businesses to identify and navigate threats earlier and more effectively.
Fast follower technology adoption is not an option
Surveyed risk leaders appear quite content with the steps they have taken recently to better utilize technology: 79% say they are satisfied with their progress in the last two years in implementing smart technologies to improve decision making in the risk function.
But the study data also reveals that risk teams lag behind the wider business in terms of technology use. Progress has no doubt been made, but the reality is that many risk teams are not where they ought to be in terms of technology adoption.
Although slow uptake of technology could be excused in the past owing to limited budgets, siloed data, and other investment priorities, this is no longer the case. Thankfully, risk leaders acknowledge the urgency around the technology agenda and have identified this as a top priority.
A strong percentage of surveyed risk leaders believe that complex, interconnected risks are emerging at a more rapid pace than ever before.
believe they are fully capable of assessing risks associated with the adoption of cloud.
Risk to overcome digital-transformation roadblocks
Despite the growing necessity for risk teams to participate in major digital-transformation projects, the study data indicates that less than a third are “very satisfied” with their progress in doing so over the past two years.
Moreover, the study data indicates that risk teams do not believe they are fully capable of assessing risks associated with the adoption of more leading-edge technology. Only 49% believe their teams are “fully capable” of assessing risks associated with their business’s adoption of cloud. Fewer believe they are fully capable of assessing risks associated with their business’s adoption of artificial intelligence, blockchain, and robotic process automation.
Reposition risk to safeguard growth
Having a strong and independent view from the risk function gives businesses more confidence in their growth and transformation plans and allows them to be executed at greater pace.
Although eight in ten risk leaders say their teams now spend significantly more time on value-adding activities compared with two years ago, the same proportion struggle to balance this with traditional duties.
Risk cannot engage in every growth initiative; instead, it needs to focus on those that are most critical to the viability of the business. And risk then needs to make sure that it has both the time and skills required in order to give these projects the attention they deserve.
Seventy-one percent of risk leaders say that COVID-19 exposed deficiencies in their ability to respond to crises.