Risk management still seen as a compliance function in the majority of firms, despite the credit crunch, finds E&Y study.
Companies are ignoring strategic risk management despite the credit crunch having become a painful operational reality for most, according to the annual Ernst & Young 2009 Business Risk Survey.
This year the credit crunch displaced regulation and compliance from last year’s top spot.
Many businesses are currently focused on managing short term operational risks, said Gerard Gallagher, head of business risk services at Ernst & Young.
‘This approach exposes them to major gaps in how they foresee and manage strategic risk, particularly with regards to contingency planning for unthinkable events.’
“Risk management needs to be taken back from the compliance functions into the boardroom very quickly and the bar must be raised.
‘Risk management needs to be taken back from the compliance functions into the boardroom very quickly and the bar must be raised,’ he explained.
The risk of ‘radical greening’ also ranked higher than a year earlier. ‘Radical greening relates to the strategic pressures created by rising environmental concerns and the threat of climate change,’ said Gallagher.
He insisted that a range a range of businesses would be competing to provide green products and services in 2009. Reputation risk jumped 12 places in this year’s study.
The risk from non-traditional entrants leapt up 11 places to the fifth spot for 2009. ‘Some sectors are experiencing a swell of new competitors eager to grab market share and challenge industry stalwarts,’ commented Gallagher.