January 18, 2017 by Canadian Underwriter
Equipment failure, cyberattacks and natural disasters have negatively affected operations at companies based in the United States over the past five years, according to a new FM Global-commissioned study on operational risks.
The study, titled Finance’s Role in Operational Risk Management: CFO Research on Building a Resilient Company and released on Wednesday, was commissioned by FM Global, one of the world’s largest business property insurers and conducted by CFO Research Services. The research is based on responses received during late 2016 from 100 chief financial officers or senior most financial executives at U.S.-based companies, the majority of whom are from Fortune 1000 organizations across a wide variety of industries, FM Global said in a press release.
The study found that 66% of financial executives surveyed said their organizations have been harmed by equipment failure, nearly 60% said their firms have been impaired by data breaches or cyberattacks and more than half (52%) have had their operations affected by natural disasters. Yet the majority (54%) said their organizations have not developed or tested formal loss recovery plans, the release said.
“It’s surprising the number of companies that have been harmed by operational risk events, coupled with the relatively low number of companies that feel they are very well prepared for a disruption event,” said Eric Jones, operations vice president and global manager of business risk consulting with FM Global, in the release. “The findings reveal the opportunity for financial executives to implement stronger plans with increased data, to help move resilience forward within their organizations.”
“The role of the CFO is being increasingly challenged by serious risk events, which drive volatility and will make it more difficult for them to meet revenues and earnings if these risks are not properly managed,” said Jones. “The pathway to a successful risk management program must include an effective loss prevention program, combined with resilience planning in order to deal with constantly evolving technological, political and environmental risks.”