Fewer than half of respondents in a PwC internal audit survey said their IA teams are addressing the threats CEOs deem most urgent. Here’s how to close the gap.
A few companies are achieving superior outcomes through a bolder approach to risk. Here’s how to follow their lead.
The benefits of being a risk pioneer
PwC’s 2023 Global Risk Survey polled nearly 4,000 business leaders on how they’re navigating an increasingly complex risk landscape. The survey revealed that a small share (5%) of respondents are handling risk more effectively than others in a number of key ways. These “risk pioneers” are more likely to see risk through the lens of value creation (as opposed to value protection), are more consistently leveraging both technology and human-led innovation to improve their approach to risk, and—as the chart above shows—have largely already achieved a set of positive risk-management outcomes, like enhanced customer trust and expansion into new markets.
What do risk pioneers do that other companies can learn from? These five things, for starters:
Match tech ambition with action. Most survey respondents say they want to take a more tech-powered approach to risk, but risk pioneers are ahead of the pack in the actual implementation of predictive analytics and other cutting-edge tech and data tools. They are also better at managing the challenges—from maintenance costs to security vulnerabilities—posed by legacy technologies.
Put purpose at the heart of risk strategy. Only 32% of overall respondents say their organisation uses a clearly articulated purpose to inform their decisions about risk—compared with 59% of risk pioneers. An approach to risk led by a clear and authentic purpose can provide a vital strategic lens for deciding whether a risk is more a threat or an opportunity.
Build a foundation of resilience. Risk pioneers are more likely to have invested in a wide range of resilience initiatives in the previous 12 months. These can include establishing a diverse resilience team—one comprising members from functions like business continuity, cyber, crisis management and risk management—as well as expanding supplier networks and building backup production facilities.
Foster a workforce that thinks creatively about risk. Only 31% of overall survey respondents say upskilling for risk preparedness is a priority. Compare that to 60% for risk pioneers. Similarly, only a quarter of overall respondents say their organisation has a culture that tolerates the kinds of small-scale failures that breed innovation, compared with half of risk pioneers. Organisations will need to recognise that the whole organisation has a role to play in navigating risk, from increasing collaboration internally and externally to challenging risk-appetite assumptions.
Fix the leadership disconnect. When sorted by job role and function, the survey findings show that risk officers and their teams often have a view of risk appetite that’s not aligned with that of the CEO and board. Risk pioneers aren’t immune to this disconnect (only 32% of them say the two camps have matching views), but they’re farther along than other companies (22%) in remedying it. Increasing collaboration between the risk function and executive leadership is key to moving from a reactive response to threats to an opportunity-focused posture.
Explore the full findings of PwC’s Global Risk Survey 2023.
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