Majority of the companies have now started managing strategic risk rather than limiting their focus to traditional risk areas such as operational, financial and compliance risk, according to a survey.

Strategic risk has become a major focus for 81 per cent of surveyed companies, stated advisory firm Deloitte.

Deloitte’s recently published survey entitled ‘Exploring strategic risks,’ shows the progress of companies in managing the risks affecting their business strategy.

The survey analyzed the responses of more than 300 senior top management and board members, representing all major commercial sectors and all geographical regions across the world.

According to the survey which was conducted by Forbes Insights on behalf of Deloitte, 81 per cent of respondents reported having an explicit focus on managing strategic risk, with reputation cited as the #1 risk they are concerned about.

Meanwhile, only 13 per cent of respondents indicated that their risk management program supports their ability to develop and execute business strategy.

“A big reason is that strategic risks – those that either affect or are created by business strategy decisions – can strike more quickly than ever before, hastened along by business trends and technological innovations such as social media, mobile and big data.”

The Deloitte survey highlights what leading companies are doing to manage strategic risk – and how are they preparing for the future:

  • Strategic risk has become a major focus, with 81 percent of surveyed companies now explicitly managing strategic risk – rather than limiting their focus to traditional risk areas such as operational, financial and compliance risk.
  • Nearly all respondents (94 per cent) have changed their approach to strategic risk management over the past three years. The numbers were slightly higher in Asia/Pacific (96 per cent) and slightly lower in Europe/Middle East/Africa (EMEA) (91 per cent).
  • 49 per cent of EMEA companies describe their risk management programs as inadequate and 91 per centof EMEA companies have changed their approach to strategic risk management.
  • Reputation risk was listed as the biggest risk concern, due in large measure to the rise of social media, which enables instantaneous global communications that make it harder for companies to control how they are perceived in the marketplace.
  • Strategic risk management is a CEO and board-level priority. Two thirds (67%) of the surveyed companies say the CEO, board or board risk committee has oversight when it comes to managing strategic risk.
  • 53 per cent of respondents believe technology enablers and disrupters such as social, mobile, and big data could threaten their established business models, and 91 percent have changed their business strategies since those technologies began to emerge.
  • •he top strategic assets that businesses will need to invest in in the coming 3 years are human capital and innovation.

“In response to these issues and trends, companies are making a deliberate effort to improve their strategic risk management capabilities and performance,” revealed Sidani.

“Companies are now using strategic risk management as a tool to make decisions with more confidence and create greater business value,” he added.-Trade Arabia News Service

First Published in Business Insurance By Sarah Veyse