The most popular and comprehensive Open Source ECM platform
Risk management is important to a business, but many c-level executives aren’t sure how best to handle it. Often the conclusions and recommendations from a risk management report can be at odds to strategies and initiatives being developed by executives.
Risk managers and C-level executives, in fact, are at growing odds over the importance of the job of risk managers. Each year over the last three years, risk managers have increasingly said that their value to the business is increasing. Today 85 percent of risk managers say their value to the company is high. But in each of the last three years, fewer and fewer c-level managers have reported that risk managers are of high importance to them. Now just 71 percent of c-level managers say so. That’s according to a report by Marsh on risk management.
Max Rudolph, CEO of Rudolph Financial Consulting, said that “The job of a risk manager can be difficult. Few want to listen to warnings, but once a risk has surfaced you don’t want to be the chief risk officer with no plan in place. As Nassim Taleb has said, once a black swan has revealed itself many will say they predicted it in advance. Of course, in reality, most did not, and certainly few made any effort to mitigate the risk.”
Interestingly, the economic downturn has forced many organizations to take a deeper look at risk analysis. More than a third of organizations have increased their use of risk data analytics over that period. And now more than half (51 percent) of c-level managers say that creating a formal risk management process is important for the business and helps in both short-term and long-term strategic planning.
Ramifications of the economic downturn are that c-level management now says that it’s important to overhaul how risk management is handled within their companies. C-level executives are gradually coming to expect that changes made to improve their risk management program will ultimately equate to improved business results. That’s the results of a report by Accenture.
Dan London, managing director of Accenture’s Finance & Performance Management practice, said that “executives could improve their organizations’ performance and position themselves for economic recovery by linking and balancing risk management and performance management to aid their decision-making and increase shareholder returns.”