Adjusting to the new world of risk management
As used in this document, “Deloitte” means Deloitte & Touche LLP, Deloitte Tax LLP, Deloitte Consulting LLP, and Deloitte Financial Advisory Services LLP, which are separate subsidiaries ofDeloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.
Just when you think the world is returning to normalafter an earthquake, it hits: aftershock. As the earth’scrust resettles from the effects of the primary earthquake,aftershocks can continue to rattle the area minutes, days,and even months later.It’s a feeling that may be familiar to risk leaders in manydifferent industries these days. Following the latest globaleconomic crisis, organizations of all types are still operat-ing in a volatile, highly changeable risk environment.In a spring 2012 survey of 192 U.S. executives fromcompanies in the consumer and industrial products, lifesciences, health care, and technology/media/telecom-munications industries, Deloitte and Forbes Insights foundthat many are still working hard to make sense of thisenvironment. In fact, a stunning 91% plan to reorganizeand reprioritize their approaches to risk management insome form in the coming three years.
If risk leaders are still planning signiﬁcant changes to theirapproaches, perhaps that’s because they sense that insome instances, the aftershock of an earthquake couldbe even stronger than the original event. Indeed, surveyrespondents do not expect the volatility of recent years tosubside any time soon. Many are concerned that it will in-crease: In fact, two-thirds of respondents identiﬁed ﬁnan-cial risk as having the potential to be even more volatileover the next three years. More than half indicated theybelieve that risks ranging from regulatory to technology togeopolitical/political concerns would increase in volatilityover the next three years. Only 15% believed risks wouldbe less volatile over the same amount of time.
Right tools for the job
So how are companies prepared to handle continuedvolatility? Respondents indicated that the move to anEnterprise Risk Management (ERM) approach will likelycontinue. For many, ERM is already an integral compe-tency for C-Suite executives, providing them a centralizedprocess for connecting the dots on risk across their orga-nizations — and pushing the responsibilities of day-to-dayrisk ownership out to business leaders.Interestingly, despite advances in risk-related technolo-gies and ongoing concerns about volatile risks, automa-tion tools used for continuously monitoring risk do notenjoy widespread use. Fewer than 25% of respondentsindicated that most risks are continuously monitored intheir companies. Even in the areas that are consideredto be most volatile, namely ﬁnancial and strategic risk,relatively few companies use technology to continuouslymonitor risks. Instead, more than two-thirds say they onlyperiodically monitor risk across the organization. Lookingahead, however, this trend may change. More than half ofrespondents said their companies plan to invest in continu-ous risk monitoring.
Social media presents new challenges
A relatively new risk — social media — has quickly joinedthe ranks of traditional risks, such as the global economicenvironment, regulatory changes, and government spend-ing. Social media is considered the fourth-largest sourceof risk for survey respondents, partly due to its ability toact as an accelerant to other risks. This so-called “wildﬁre”effect may present challenges to companies without suf-ﬁcient continuous risk monitoring capabilities.
These are only a few of the top-level ﬁndings from our survey. On the following pages, please explore moredetailed, in-depth ﬁndings from U.S. executives on someof the most pressing issues they face today.