Five years on from the financial crisis and a new investment phase appears to be on the horizon meaning firms plan to increase risk management budgets

Companies are planning to increase spending on risk management as a new investment phase draws nearer, according to international financial and investment consultants Smith & Williamson.

A survey by independent accounting and consulting network Nexia International, Global Risk Management Survey, last week revealed 48% of businesses plan to raise spending on risk management in 2014.

The rise in expected risk management spending is in a large part owing to a post-financial crisis investment phase as firms look to expand and grow said Nexia member firm Smith & Williamson partner and head of international services Stephen Drew.

Drew said: “There is anecdotal evidence that the volume of transactions is starting to increase and you can foresee that it might continue. You can see the volume of international transactions appears to be increasing. What we don’t know is if this is a short-term phenomenon or if it will continue.”

He added: “The key difference that I observe when talking to people is that there is a greater confidence when thinking about investment plans than there was before. There has been an attitude shift and that could lead to an investment cycle.”

Drew said that while confidence in investment opportunities had grown, the risks they presented must be considered too. Higher head counts, more transactions and expanding into new territories provide firms with a greater number of risks, meaning the natural practice for any firm looking to expand is to strengthen its risk department.  

He said: “If you want to optimise the benefits of investments, whether it’s hiring people or expanding into new territories, then you must take account of what the regulatory and operational issues are there and make sure you put appropriate planning in place to optimise the efficiency of that investment plan.”

The survey included senior professionals of mid-market businesses from a wide range of sectors around the world that selected social media, succession planning and natural or man-made disasters as the risks they were least prepared for.

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