Whatever the threat, risk managers are essential to business resilience
Geopolitical stresses, erosion of international trade cooperation, regulatory uncertainty and cyber risks are increasing in the severity that senior management and risk managers alike expect that they could have in 2019.
Following publication of the annual Global Risks Report from the World Economic Forum, the President of FERMA Jo Willaert said: “These threats are always among the top concerns of senior management and risk managers alike, however they rank them. This reinforces the need for companies to have a truly enterprise view of risk and to be aware of the connections that exist between different threats. As risk managers, our role is to coordinate awareness and action across functions so the business is resilient whatever the nature of the threat.”
The 14th edition of the Global Risks Report, prepared with the support of Marsh & McLennan and Zurich Insurance, followed publication of FERMA’s European Risk Manager Report in December 2018, and Allianz’s 8th Risk Barometer earlier in January.
The WEF report has always taken a global, macroeconomic approach, and this year is no different. The top three risks that respondents expect to deteriorate in 2019 are linked to worsening economic and political relationship between major powers and erosion of multi-lateral trading rules and agreements. Technology, however, also continues as a major element in the global risk landscape.
Cyber risks, either in the form of theft of data or money or of disruption to operations or infrastructure, were named by more than 80% of respondents as risks that they expect will increase in 2019. This put the two types of cyber threat in fourth and fifth place respectively among the top five risks.
For European risk managers, cyber risks have risen to the top level of threat to business progress over the last two years, according to the FERMA European Risk Manager Survey 2018. The survey found that risk managers are increasingly involved in dealing with technological developments and they work more closely with IT departments. Economic and geopolitical pressures, over-regulation and changing consumer behaviour made up their following top five risks.
A similar finding came from the Allianz Risk Barometer, which also focuses on business risks. The greatest concerns of its international respondents were business interruption, including supply chain disruption, and cyber incidents, including crimes, data breaches, fines and penalties. Natural catastrophes; regulation and legislation, including trade disputes; and market developments were their other top five concerns.
Jo Willaert recommends that companies consider all three reports and assess their own sensitivity to the risks that they identify. “Such reports are valuable in highlighting common concerns to all businesses. They help companies examine their specific exposures and apply good risk management to mitigate their impact on existing operations and developing opportunities.”