For managing directors and chief financial officers, there are always a number of risks to manage and monitor within an organisation. Regardless of if they are external or internal, these individuals have a responsibility to clients, stakeholders and other employees to ensure every risk has
been planned for.
However, according to new data from Ernst & Young (EY), many executives and boards in Australia are falling short of the recommended risk management standard. Its survey polled close to 1,200 C-suite leaders, board audit committees and other executives from around the world - including 82 Australian representatives.
'Real time' analysis required
Based on the results, just 7 per cent of Australian boards are conducting risk management processes in a timely manner. In context, the identification and evaluation of risks should be completed in 'real time' so executives have the chance to use as part of their daily decision making.
"The identification and evaluation of risks should be completed in 'real time'."
Oceania Risk Transformation Leader Catherine Friday believes that Australia's risk management strategies are outstanding, but lack the frequency to be of value. Therefore risks should be considered on a 'real time' basis, Ms Friday added.
"While an annual review process can be useful, it really is the bare minimum in terms of connecting risk information to business planning and decision-making," she said.
"As market dynamics and volatility continue to develop at pace, the organisations that are out-performing their peers are those that have faster and better risk identification and response built into their business as usual (BAU) program management."
Based on the Allianz Risk Barometer 2015, the top global risks include business interpution and supply chain risk, national catastrophes, fire and changes in legislation. Given this rising tide of market volatility, geopolitical crises and other economic concerns, risk management experience must be a top skill when searching for an executive.
Planning for the worst
As mentioned above, executives across Australia should be monitoring risks on almost a daily basis. As such, it is important for these individuals to understand what these risks actually are.
According to the 2015 International Business Resiliency Survey published by global risk management firm Marsh, IT and cyber issues hold the greatest threat to operations and business productivity.
Polling more than 200 C-suite executives, the majority of the top ten risk scenarios surrounded information and data loss. This included the top answer in which 77 per cent of respondents believed that they were at risk from reputational damage because of a sensitive data breach.
When it comes to executive recruitment, risk management skills and experience are a must. To gain access to a wide pool of executive talent, contact the expert team at Design & Construct today.