Risk Management Increasingly Drives Competitive Advantage

A new report by Accenture underscores the importance of senior management’s role in business continuity and disaster resource planning. Most significantly, seventy-nine percent of respondents said the person responsible for risk management in their organization reports directly to the CEO.

The report, “Risk Management as a Source of Competitive Advantage and High Performance, Accenture 2011 Global Risk Management Study,” is based on a survey of executives from 397 companies within 10 industries. Comparisons can be directly made to Accenture’s 2009 study on the same topic.

According to an ABA Banking Journal report, analysis of the executives surveyed across the 10 industries revealed the following:

In 2009, 85% said their company’s risk management needed to be aligned with the company’s business strategy. In 2011, 85% said that risk has become a driver of competitive advantage for their company. Significantly, in the current survey, 49% of respondents said corporate risk management will enhance the likelihood of their company’s long-term profitable growth.

The report also revealed a key insight that should make senior executives very uncomfortable: “Despite major investments to improve their risk management capabilities, the executives believe their companies still face critical exposure to risk. They also believe the benefits of enhanced risk capabilities have yet to be realized,” according to www.ababj.com.

The Accenture report also revealed:

  • 52% said their individual company has invested $25 million or more since 2009 to improve risk management capabilities
  • 1 in 10 said their company’s investment had exceeded $250 million.
  • More than 80% said that the increasing volatility and complexity of the economic and financial environment have elevated the importance of risk management as a key management function.
  • 67% said their company currently has an enterprise risk management (ERM) program. And 15% who don’t currently have an ERM program said they have plans to implement such a program in the next two years.
  • 45% said their company has a chief risk officer, up from only 33% as reported in the 2009 survey.
  • 23% revealed that their company’s CEO owns the responsibility for risk management, an increase of 10 percentile points since the 2009 report.

The survey also indicated that the top five challenges during the next two years included 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.

For more coverage on the Accenture report on the importance of risk management, visit: http://www.ababj.com/tech-topics-plus/risk-management-seen-as-increasingly-driving-competitive-advantage-2108.html

To view the Accenture 2011 report, visit: http://www.accenture.com/SiteCollectionDocuments/Microsites/risk-research-report/Accenture_Global_Report.pdf