3. Fix the leadership disconnect
Most organisations (91%) are confident they can balance growth ambitions with managing risk effectively, but there are differences when we analyse responses across different job roles and functions.
For example, half of CEO and board respondents are very confident of balancing growth and risk compared to just 34% of operations leaders and 30% of audit leaders. And only just over a fifth of risk executives say their own risk appetite matches that of their CEO and board.
There is also misalignment on the perception of the strategic value the risk function provides, with CEOs less likely than risk executive survey respondents to agree the risk function is demonstrating behaviours such as bringing risk insights to the board for better oversight, guiding the business through complex change and challenging senior management.
For example, 60% of risk executives say they are already demonstrating providing insights on new and emerging risks to senior management versus 54% of respondents from the wider business—CEOs, the board, operations, tech and finance.
This disconnect is also evident in PwC’s Global Internal Audit Study 2023, with business leaders stating they want more early and proactive strategic engagement with Internal Audit. Despite that expectation, only around a fifth of executives ranked strategic thinking and the ability to challenge constructively as key strengths of Internal Audit. And almost half (49%) said Internal Audit does not have strong alignment with other lines on key risks and challenges.
We see far greater alignment between the CEO/board and risk among the top performing Risk Pioneers. Almost a third (32%) of Risk Pioneers stated that their own risk appetite matched exactly that of their CEO and board, compared to just 22% of overall respondents.
This leadership disconnect needs to be resolved if risk management is to amount to more than value protection and a reactive response to threats. Fostering greater collaboration between the risk function, leadership and the wider business and having more strategic conversations earlier in the process are key if organisations are to find opportunities where competitors may still see risk.