KPMG research has found that out of the four of the five top issues that were raised by CEOs, a real risk dimension such as changes to business models or operations, growth and people management, were each regarded as potentially increasing their risk profile. However, the survey then went on to find that only 21 per cent of CEOs specifically prioritized risk within their top three concerns. This is according to some of the headline findings of KPMG’s latest Business Leaders Survey.*
Geoff Dadswell, KPMG Risk Consulting, Senior Manager, commented:
“While risk management’s position at the top table has begun to be cemented, as these results show, there is still some way to go for it to be fully integrated into the CEO’s agenda and considered as a key component of business decisions.
“The last thing that CEOs want or need is any unexpected surprises, especially in an age of the 24/7 news cycle and increasingly demanding customers and other stakeholders. But as we’ve seen in the last week – this is often far from the case, as the pumps have run dry and the furore surrounding the price hike in hot food, has put some businesses on the back foot.”
Of the 21 per cent of respondents who had prioritized risk, the research found that less than half of respondents ─ 44 percent ─ cited regulatory risks as their main risk issue. This is somewhat surprising given the increased regulation that has started to appear in the last few years, including the Bribery Act, Basel III, EU and US sanctions, and FSA regulations, as well as the almost daily stories of enforcement actions taken by prosecutors and regulators across the globe.
In addition, the research also found that just over a fifth (21 percent) indicated that reputational risks such as fraud and bribery and corruption when operating in partnership or entering new territories were a priority for them. Given the increased risk profiles presented by operating in new overseas jurisdictions, especially in partnership or via third parties, and as reputations are increasingly lost in an instant in today’s business and social climate, the fact that priority for this risk is so low among CEOs seems to indicate that many UK corporates are vulnerable to such reputational disasters in the future.
Finally, of those respondents who chose “embedding sustainability” as their top priority issue, only 27 per cent said they are managing their external relationships for reputational risk issues.
Geoff Dadswell commented:
“Regulatory risk management is no longer the preserve of “regulated industries”, such as financial services, and is fast moving up the boardroom agenda across all industry sectors.
“The risk of a double-whammy in the form of greater regulatory requirements and additional exposure through increased fraud as ‘austerity Britain’** bites, explains why it is so strategically important to embed risk management into each business decision that an organization makes.
“But it is clear from these results that there is still more to be done, and as companies seek to grapple with the increasingly difficult juggling act of not only the need to generate profits, but also to consider relevant laws and manage reputation, is it more important than ever that risk management is an issue that needs to be managed from the top-down.”
- Ends -
Notes to editors:
* This is the third “Business Leaders” survey by KPMG. Conducted online between 9th – 26th January it is based on the views of over 3000 respondents from 31 countries (Austria, Bahamas, Bahrain, Belgium, Bermuda, Cayman Islands, Cyprus, Czech Republic, Denmark, Dutch Caribbean, Germany, Greece, Ireland, Italy, Jordan, Kuwait, Luxembourg, Malta, Norway, Oman, Poland, Portugal, Qatar, Romania, Saudi Arabia, Slovakia, South Africa, Spain, UAE and UK). 188 respondents came from the tech sector. Designed to identify where executives are focusing today and what the most important topics for their organisations are, the survey is carried out regularly in order to monitor trends and identify how are business needs evolving in the current environment.
** See KPMG’s Fraud Barometer here.
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