Originally posted July 25, 2013 by Rodd Zolkos on http://www.businessinsurance.com
A new report from Forbes Insights sponsored by Zurich Insurance Group Ltd. suggests that many executives don’t understand their companies’ exposure to risks or their strategies to manage them.
The survey of 414 U.S. executives in the banking and financial services, real estate, health care and construction industries found that 28% indicated their company had suffered financial damage as a result of operational risk, 27% because of regulatory or compliance risk and 26% as a result of financial risk.
But when asked about the top barriers to effective risk management, 36% of executives in banking and financial services and 29% of those in real estate cited a lack of understanding of how to mitigate exposures as the top barrier. Among construction executives, 43% cited a lack of understanding of the sources of risk as the top barrier, while insufficient risk management budget was cited as the top barrier by 33% of health care executives.
A lack of understanding of how to mitigate risks was the second-greatest barrier cited by construction executives, at 27%, and health care executives, at 30%.
However, large percentages of executives in each industry category indicated they would manage risk no differently in the next three years: 41% of banking and financial services executives, 50% of construction executives, 42% of health care executives and 47% of real estate executives.
Of the total group, 76% of executives rated the need to align risk management with their company’s growth strategy as very or extremely important, and 68% said they thought their company was doing so. But only 54% said they were confident or very confident of how aware they were of the risks associated with their company’s growth strategies.
The report, “The Sharp Side of Risk: Understanding, Anticipating and Managing Business Risk,” is available here.