Canadian Underwriter

Companies feel unprepared to deal with disruption

April 11, 2003   by Canadian Underwriter

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Top financial executives and risk managers do not see their companies as fully prepared to face a disruption to top earnings drivers, suggests the annual “Protecting Value Study” by FM Global, the Financial Executives Research Foundation (FERF) and The National Association of Corporate Treasurers (NACT).
The study of U.S. and Canadian executives shows that 100% say a major disruption to a top revenue source would have a negative impact on earnings, with 28% saying this would impact business continuity. However, 88% of financial executives and 83% of risk managers say their level of preparedness for such an event is less than excellent.
In 80% of the companies, respondents say they have not seen a significant shift in either strategic or operational risk management strategies since September 11, 2001.
There was some disconnect in perception between financial executives and risk managers, with the former seeing improper management and employee practices as the leading hazard, and the latter focused on property-related risks.
“Financial executives and risk managers share a common pursuit of balancing risk and return,” says Marla Markowitz Bace, COO of the FERF. “Yet, the study found they often have different views about their company’s top sources of revenue, relevant hazards, business continuity plans and insurance budgets. To effectively address the large inventory of business risks, there needs to be better communication between financial executives and risk managers.”
Executives report a willingness to direct funds towards business continuity and contingency planning, the survey also found.

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