Risk attitude of Central and Eastern European companies explored
The survey results are contained in a new report by Marsh entitled ‘Opportunities for competitive edge in Central and Eastern Europe’. It sampled 1,200 senior executives from 12 countries across the CEE region whose companies operate across a variety of fields about their attitudes to risk, business structures and risk concerns. Neil Irwin, European managing director of client development at Marsh, said: “Many companies surveyed were very risk-aware and generally believed their compliance risks to be well managed. However, the high number of respondents not applying robust procedures to mitigate these risks indicates a lack of understanding of reporting standards in critical business areas. It appears many executives are unaware of changes to regulations that have a direct effect on their businesses and are thus operating under a false sense of security.” The threat of increased competition was the most frequently stated risk with 83 percent of respondents rating it as ‘significant’. However, it was also the risk that businesses felt they were least prepared to mitigate against, with only 37 percent applying robust procedures to deal with it. One in five of the survey participants said they had experienced a significant financial loss during the last three years. Of these, 75 percent responded by creating a crisis management plan to minimise any future losses. Of those that did not experience a significant loss, less than 20 percent have developed a plan – or will – unless a loss occurs. Mr Irwin said: “Most companies are aware of the need to establish a match between risk exposure and insurance, with 60 percent saying it is an important business move. However, fewer than 30 percent of respondents maintain a formal register of assessed risks. “Central and Eastern European companies are good at reviewing risks with almost half meeting quarterly to decide what issues may negatively affect the business. The worrying sign is that almost one-fifth of companies review risk issues on an ad hoc or post event basis. This is simply not enough or too late. “While companies operating in the CEE region have grasped the strategic importance of risk management, many have yet to put in place systems and procedures to adequately deal with the risks they may face.
•Date: 12th Dec 2006• Region: E.Europe •Type: Article •Topic: Operational risk |
