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Risk management gains importance at corporate agenda: Accenture

Nearly half of the organisations feel that corporate risk management will enhance their long-term profitability

By CBR Staff Writer

Organisations across the world are considering corporate risk management as one of the top priorities in their corporate agenda to gain a competitive advantage, according to a new report by Accenture.

Of the 397 executives participating in the study, "Risk Management as a Source of Competitive Advantage and High Performance, Accenture 2011 Global Risk Management Study," 85% said that risk has become a driver of competitive advantage for their company.

Nearly half (49%) of the respondents believe that corporate risk management will enhance the likelihood of long-term profitable growth for their company, while 48% said it will support sustainable future profitability.

More than half (52%) of the respondents said their individual company has invested $25m or more since 2009 to improve risk management capabilities, and one in 10 said their company’s investment has exceeded $250m.

Despite these investments, 83% of the respondent said additional investments would be made in risk management in the next two years as companies navigate market volatility, manage increased complexity and address a proliferation of risks ranging from supply chain and other operational issues to new regulations, reputational concerns and increased threat from financial fraud and other cyber- based crime.

Over 80% of the respondents said risk management has gained importance as a key management function due to increasing volatility and complexity of the economic and financial environment.

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As further evidence to this, 67% of executives said their company currently has an enterprise risk management (ERM) program, and an additional 15% said they have existing plans to implement an ERM program within the next two years.

The study also found that nearly half (45%) of the respondents said their company has a chief risk officer (CRO) today, up from only 33% just two years ago.

Nearly one quarter (23%) executives also said their company’s CEO now owns the responsibility for risk management, up from 13% two years ago, while 79% of the executives said the person responsible for risk management in their organisation reports directly to the CEO.

The study found that only about 10% of the companies represented by the executives could be classified as "Risk Masters," a term Accenture ascribes to organisations with advanced risk capabilities in areas considered to be of greatest significance to their organization and their overall business strategy.

The survey indicated reducing cost, aligning risk management with the company’s overall business strategy, responding to regulatory demands, improving risk measurement and improving modeling and data management as the top five challenges for all risk organisations in the next two years.

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