The Future of Risk Management: A Proactive Approach

For many organizations risk management is rapidly developing into a more forward looking,

enterprise-wide approach, according to Accenture’s 2011 Global Risk Management study of

almost 400 executives from 10 major industries. To achieve effective enterprise risk management,

organizations must focus on being proactive, rather than merely reactive, and use risk management

to both drive competitive advantage and sustain future profitability and growth. The study highlights

key results from their survey, challenges that remain, and recommendations that can improve risk

management programs.

According to the survey, the following areas are facing increased emphasis from today’s executives

in risk management:

Risk management is essential to strategic objectives of all industries due to increasing volatility
and complexity.
Risk management capabilities are crucial to long-term growth and future profitability.
Comprehensive enterprise risk management programs are being implemented and improved.
C-level risk oversight functions are being established, such as the Chief Risk Officer.

Even though risk management has advanced substantially in the last two years, many challenges

remain. The main challenges seen ahead by risk management executives are:

The spectrum and consequences of risks are increasing.
Critical exposures remain as organizations do not measure all major risk items, such as
emerging, political, and reputation risks.
The use of organizational silos is preventing effective integration of risk management.
Performance gaps exist between expected and actual achievements, as well as from the lack of risk culture infused throughout the organization.

The costs associated with risk management and the alignment with overall business strategy.

Lastly, the study lists ways organizations can emulate risk management strategies from Risk

Masters, or companies with established, multi-dimensional, effective enterprise risk management

programs, such as:

Use risk management as a competitive advantage to drive shareholder value.
Key decision-making, such as mergers and acquisitions, should involve the risk function.
Refine measurement and modeling of risks to facilitate more complete analysis and evaluation
of risk scenarios.
Look beyond a compliance mindset and focus on achieving complete organizational solutions to establish differentiation.
Integrate risk management programs across the organization.
Establish a risk executive with oversight and visibility across the organization.
Develop risk awareness across the organizational culture.

To achieve effective enterprise risk management, organizations must focus on being proactive,

rather than merely reactive. Organizations capable of establishing an integrated approach to

enterprise risk management can create shareholder value by driving future growth and

profitability, and differentiating themselves from competition.

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