More corporations are ramping up their risk management efforts, but half of them struggle to staff up those initiatives, according to a recent study by Accenture
The changing economic landscape and regulatory pressures are leading a growing number of corporations to ramp up their risk management efforts, but half of them struggle to staff up those initiatives, according to a recent study by management consulting firm Accenture.
The Accenture 2013 Global Risk Management study, a survey of 446 executives in seven industries and two government sectors world wide, says 98 percent of organizations consider risk management more important than it was two years ago. Survey respondents cited external factors such as legal risk (62 percent), business risks (52 percent) and regulatory requirements (49 percent) as major concerns.
The survey also shows that 92 percent of organizations are integrating risk management more into their decision-making process for budgeting and forecasting; 87 percent for financing and merger and acquisition decisions; and 84 percent for strategic planning. Still, more than half (54 percent) of organizations surveyed reported that finding the right talent for these roles remains a major challenge. When asked where skill shortages were most acute, 61 percent of survey respondents said business and data analytics, 60 percent chose risk technologists and 46 percent cited regulatory change program management as areas where talent was lacking.
‘While there has been an increased focus on risk management, working in this field requires specific skills,’ says Chris Thompson, managing director, Accenture Risk Management, North America. ‘You can’t simply pull people into these roles without the proper training and experience. There is strong demand for a finite number of people who have the requisite risk management skills.’
While some existing positions can be repurposed and people retained to perform risk management tasks, effective execution encompasses a more sophisticated use of metrics and data to monitor, measure and inform management’s decisions, he says.
‘There’s more science around proactive risk management that actually helps management take on more risk and support execution of the business strategy,’ Thompson explains, contrasting the process to simply managing against the fallout from a threat to profits, reputation or brand. ‘It’s moving away from management by gut feeling.’
Accenture recommends the following approach to achieve risk capability:
- • Treat risk as a ‘people game.’ Develop a risk staff with strong business acumen and a deep understanding of the broader business.
- • Look ahead. Develop risk capability plans for tomorrow’s risks and aligned with the organization’s business development plans.
- • Manage regulation. Align business models, processes, reporting and data structures with business change agenda to enable effective regulatory solutions.
- • Focus on insight. Extend beyond the data and analytics to derive value of what the numbers mean.
