Scenario planning, agile business strategies, a focus on long-term vision, better and improved risk management and more frequent and impactful responses to market disruptions are essential to continued business success. These were some of the views of decision makers in a new EY Global Board Risk Survey.
The key findings are that modern enterprise risk management needs a long-term perspective, aligning risk management priorities with business strategies and focusing on emerging risks.
The survey comprised 510 global board directors from organisations with a revenue of more than $1 billion.
The report acknowledged that the COVID-19 pandemic has played a part in accelerating the risk landscape into new unchartered territories, adding: “COVID-19 is not only a major risk event in itself – it is also an accelerator of risks that were already omnipresent: cybersecurity attacks, supply chain disruption, geopolitical tension and other external threats.”
Seven out of 10 boards say that they will be investing in new technology to address their risk management needs in the next 12 months. Likewise, boards want risk reporting that is predictive, focusing on emerging and atypical threats, and built on a combination of external and internal data.
Interestingly, only 20% of boards believe that their organisations are effective at disaster response planning and understand the interconnectedness of their risks.
Furthermore, the way forward is combining both new data technology with a strong risk reporting system, that incorporates the interconnectedness of the organisation across all areas.
Only 49% of CEOs say that their risk assessment processes are adequately data-driven.
It seems that organisations want to broaden their thinking and consider more longer-term trends that may benefit or harm their organisations. In particular, board members want to spend more time on strategy and scenario planning and less time on risk and compliance.
For example, 43% of members devote a large allocation of their time to financial reporting but only 18% think they should do so.
59% of board members believe that allocating time to open discussion of emerging trends and potential disruptions would improve risk management oversight in the long-term.
Many board members believe the pandemic has precipitated a seismic shift in terms of priorities for their organisation. 66% of respondents to EY Long-Term Value and Corporate Governance Survey believe that COVID-19 has increased expectations of shareholders that their companies will drive societal impact, environmental sustainability and inclusive growth.