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KPMG survey looks at c-suite views on top risks

According to a new KPMG International survey report, ‘Expectations of Risk Management Outpacing Capabilities - It's Time For Action,’ regulatory pressure is consistently one of the biggest threats facing companies across industries, and the number one challenge facing financial services and energy and natural resources companies. Regulatory, namely government pressure to contain spending, was the top risk in health care.

A full 70 percent of c-suite executives, across all industries, say that regulatory changes have caused either substantial or moderate changes in their risk management and reporting processes in the past two years.

Other highlights of the survey report include:

59 percent of c-suite executives at financial services companies and 53 percent of c-suite energy and natural resources executives identified regulation as their top threat;

49 percent of executives in diversified industrials said an economic slowdown in OECD markets was their biggest risk;

44 percent of executives in technology media and telecom said a slowdown in demand was their biggest threat;

When asked to rank the top three threats facing their industry, 46 percent of overall respondents included regulatory risk in comparison to:

  • Reputational (41 percent)
  • Credit/market/liquidity (34 percent)
  • Supply chain (28 percent)
  • Information protection/security/fraud (17 percent)
  • Disruptive technology risks (17 percent)
  • Data governance and quality (13 percent)
  • Legal risk (12 percent)
  • IT infrastructure (11 percent)
  • Social media (9 percent)
  • Natural disasters (9 percent)
  • Climate change (7 percent);

Despite their awareness of the risk environment and devoting more resources to risk management, many companies struggle to communicate their risk program with stakeholders, link risk management with compensation and build an enterprise-wide view of threats;

86 percent of survey respondents said risk management is factored into strategic planning decisions;

Two thirds of respondents said they will invest more in risk management as a proportion of corporate revenue in the next three years than they did in the previous three;

Almost half profess difficulties in understanding their enterprise-wide risk exposure;

Less than one fifth have developed a formal risk appetite statement, yet this is an important step in risk management;

Less than half believe their organization is effective at developing stakeholder's understanding of the risk program;

43 percent said there was a weak link between risk management and compensation.

http://www.kpmg.com/us

•Date: 17th May 2013 • World •Type: Article • Topic: Enterprise risk management

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