77% of risk leaders believe that complex, interconnected new risks are emerging at a more rapid pace than ever before according to a new survey by Accenture.
The survey based on 725 risk leaders from a range of industries including banking, insurance and energy believe that their risk teams are not making enough progress in managing the growing complexity of risk and in dealing with new threats.
This lack of agility, the survey suggests means that many risk teams become reactive when a major risk event occurs.
71% of the respondents say that COVID-19 exposes deficiencies in their ability to respond to crises. The survey reveals that financial and operational risks has risen up the agenda for many risk leaders.
Operational concerns around supply chain disruption, cyber-attacks and remote working are a concern for software and platform companies. Meanwhile, financial risks such as credit risk are a concern for utilities and energy companies.
Accenture’s Cyber Investigations and Forensic Response noticed a 50% increase in business-email attacks, 160% increase in ransomware attacks and a 200% increase in 3rd party or supply chain intrusions.
This rise in cyber-attacks and concerns over cybersecurity has unnerved many leaders, with only 49% of leaders believing that their risk leaders are “fully capable” of assessing risks associated with their business’ adoption of the cloud.
The adoption of new cloud technology reveals a dividing line between early adopters of the technology and stragglers. Life sciences and banking lead the industries in the survey with more than 50% of their risk leaders using the technology. Energy and Utilities bought up the rear with 39% and 26% of their teams using the technology.
The report goes on to note that the increasing volatile nature of risks today means that organisations need robust and agile platforms to handle these risks.
Furthermore, it notes that “innovation, preparation and then execution supported by data and insight remain the ultimate objective [for risk leaders]”. Also, modelling and analytics can support this approach, the report adds.
Such tools help leaders in strengthening and deepening their scenario modelling which can aid decision-making.
Therefore, it is no surprise that 48% of leaders have integrated scenario planning and stress testing when making important business decision making such as capital allocation. Likewise, 45% have expanded the range of risks/scenarios in stress testing to include new risks such as climate change.
Similarly, 8 out of 10 risk leaders say that their teams are spending more time on “value-add” activities than they were two years ago.
Russell have spent over six years analysing and talking about the concept of “Connected Risk”, much of which has taken place within these blog pages. So, it is promising to note that many organisations and indeed their leaders are waking up to the issue of interconnected risks and are taking the necessary steps to address it.