Andrew McPherson - Partner, Assurance, PwC Australia
Managing risk isn't just about reacting to change. It's about changing the way we see risk, shifting our perspective, considering different angles, using new techniques and data to do it. The leadership challenge in this day is complex, and we're seeing and helping many organisations at PwC take four actions to change how they see risk, how they strengthen their organisation for the future.
First of those is to require a more panoramic view of risks. CEOs making bold moves and knowing their teams generally understand the key moving pieces that contribute to risk in their organisation. But the interconnectedness and at times unintended consequences are surprising them. So there's a real opportunity to use some of that new risk tech available, move to much stronger scenario modelling, much stronger monitoring of the risk landscape. A chief risk officer is key to curating all of this, but the entire executive team gets great value and understanding from leveraging it.
Second is to state your risk appetite and set a strong risk culture so that you can take advantage of upside risks. Most organisations have adjusted their risk settings, but they're facing some challenge getting their people and culture to move with them.
Risk appetites are a key tool to use to help everyone in the organisation understand where they're able to take more risk in pursuit of opportunity. And a strong risk culture plays a very key role in leveraging the upside risks in an agile manner and protecting you from the down. PwC’s Global Risk Survey shows that over half of leaders are now moving in this direction. Almost 60% have defined their risk appetite and are investing in risk culture.
Thirdly is to position the organisation to anticipate risks and to see these changes in real time. Leaders need to be able to act with confidence and agility and a world moving so quickly, you can't anticipate future risk just by studying the past. But only 29% of organisations we've surveyed are significantly investing in their risk technology to detect and monitor risk.
In contrast, risk functions with really advanced capabilities here are using external data analytic techniques, having intelligence across that risk tech landscape much in the way that other functions have, such as finance, customer operations and so forth.
Finally, the fourth is to engage a connected community of solvers to support risk informed decision making. It takes diverse perspectives, working together to seize opportunities in a risk aware way.
Risk management is a team sport and 70% of organisations in our survey are prioritising diversity of skills in their risk critical roles. These four actions are really helping executive teams gain some real time visibility and act with the sort of confidence that is going to generate them competitive advantage forward.
And I hope these four actions are going to be useful for your executive team so that you can strengthen your organisation to act boldly with confidence and generate the competitive advantage that you wish through great risk competence.