U.S. firms expect to increase emphasis on risk management

According to a Towers Perrin survey of 75 senior finance and risk management executives in the United States including some from publicly traded companies with revenues greater than US$1 billion 85% of those surveyed think their firms’ emphasis on risk management will increase over the next five years.
“Increased regulatory and investor attention, the possibility of natural disasters and the threat of global pandemics are prompting many firms to reconsider their approach to risk management,” Prakash Shimpi, head of Towers Perrin’s enterprise risk management (ERM) practice, said in a press release,
“Most companies believe there is significant room to better understand, quantify and manage their risks. It’s really no surprise that nearly two-thirds (63%) of our survey respondents are concerned with how they manage risk today.”
Survey respondents identified operational risks — including supply chain disruptions and even a global pandemic — as the most important risks facing non-financial U.S. corporations.
In order of importance, respondents also placed property/casualty insurance risks, business and strategic risks, financial and capital market risks, and compliance risks within their Top-5 category.
Property/casualty risks include what might be considered “traditional” risks such as a plant fire or product liability. In the survey, however, respondents frequently noted that traditional risks are being integrated into the company’s broader risk profile and managed as an enterprise risk.
Survey respondents expressed concern about the “silo” nature of risk management within their organizations. Fewer than half (37%) of the companies have cross-functional risk committees, although a third (34%) either have an ERM program in place or have made a commitment to implement one. Another 36% indicate they are considering ERM as they attempt to become more proactive in the management of risk.