Happy new year Risk Management! Unfortunately for that the old Chinese saying "May you live in interesting times!" comes true in 2010. We already noticed a lot less pressure on the GRC market than on other segments during 2009 what satisfyingly lead to positive results for that solution. But obviously not only compliance topics that are demanded by regulators are still seen as business critical but also the risk management approaches of the companies get more and more under scrutiny.
This perception is backed up by a study conducted by Accenture published in July 2009 which I happened to read during my days off: Accenture conducted a survey of 260 chief financial officers, chief risk officers and other executives involved with risk management at large companies in 21 countries on their perceptions of their own risk management approaches.
Key findings are:
85 percent said they need to overhaul their approach to risk-management
40 percent said that their companies already have increased or will increase their investments in broader risk-management capabilities in the next six months.
31 percent said their companies are currently considering increasing their future investment in risk management capabilities
85 percent identified ineffective integration of risk, return and capital issues in decision-making as a problem
82 percent claimed an insufficient enterprise-wide risk culture
80 percent stated inadequate availability of timely risk, finance and business data
78 percent noted a lack of integration and aggregation across all risk types
Accenture’s analysis also pointed to a lack of integration of current risk-management and performance-management processes.
That' s really good to read. So far very often companies had seen the risk management function as a necessity that was conducted for regulatory purposes but not integrated into business planning and objective setting. For a change in that study 72 percent of respondents said that their companies’ risk management function has a major impact on their ability to comply with regulations but also 61 percent said the same about its impact on the company’s ability to sustain profitability! And still 58 percent stated that risk management has a major impact on a company’s ability to manage liquidity and cash flow.
This has a drawback side though as 41 percent of respondents reported that their risk-management costs have increased by at least 25 percent in the past three years, including 14 percent who reported a 50 percent rise in these costs. So the need for efficient but sustainable risk management approaches that are backed up by respective software raises. Good that we are able to provide support to our customers also on the risk side of GRC.
Those who are interested in the original study may follow that link: