Risk in review 2012: Rethinking risk management for new market realities

March 2012
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Risk in review 2012: Rethinking risk management for new market realities

At a glance

Companies everywhere are rethinking risk management in the light of new market realities, according to PwC’s 2011 global risk survey, which also breaks down results by region.

When global trade, financial markets, and supply chains are inextricably linked in a landscape of complexity and uncertainty, risks can come swiftly and unexpectedly—with significant potential impacts on companies’ operations, reputations, and even survival.

In response, forward-looking companies are continuing to shift their risk management focus in fundamental strategic ways, incorporating and integrating a risk-aware, top-down culture across departments and functions.

That’s one of the results of our survey of more than 1,000 executives and risk management leaders with businesses worldwide, carried out in November 2011—supplemented by in-depth personal interviews with top executives from a range of organizations.

Other key findings:

  • Most executives believe that risks are increasing, with macroeconomic and financial volatility—including the potential for severe disruption from the Eurozone debt crisis—high on the risk agenda.
  • Risk leaders are shifting their risk perspectives from the operational to the strategic—from focusing on internal risks to devising internal responses to external events, such as macroeconomic shocks and regulatory change.
  • Pushed partly by regulators, boards of directors have become more engaged with risk issues and seeking to better define and communicate a clear, organization-wide risk appetite.
  • More companies are elevating the role of the chief risk officer role, and seeking new, sophisticated tools for assessing and managing risks.

The risks ahead

With high unemployment, rising financial insecurity, and escalating social problems across many of the world’s markets, nearly 60% of executives see regulatory risk as a major threat to their business in the year ahead. And there’s significant work to be done: fewer than half of respondents feel that the role of internal audit fits well with the broader risk management efforts of the organization.

Download the study for our complete findings and analysis.