Risk Managers are Mobilized to Tackle Downturn’s Threats, Says Report
Risks posed by the economic downturn are of the highest concern, a global survey of senior executives reveals. At the same time, risk
managers are taking on a greater role, and are under more pressure than ever, to protect their companies. The risk management role is
taking center stage at companies eager to avoid exposing business to any higher degree of risk than is necessary at a time of deepening
economic gloom.
Lloyd’s commissioned the Economist Intelligence Unit to research current risk perceptions and prioritization among 570 board-level
executives.
The global survey, which took place in March, covered a broad range of sectors and company sizes, and the findings are published in
the Lloyd’s 360 Risk Insight report, ‘Risk Priorities, and Preparedness’.
Regional Variations
“Executives in all regions share similar priorities when it comes to the economy and business strategy, but there is greater divergence in
other risk categories,” details the report.
“Economic, regulatory and market risk, and business and strategic risk are given broadly similar priority ratings across the regions but
there is greater divergence when it comes to political, crime, and security risk.”
Executives in Asia, North Africa, Middle East and Latin America are sensitive to the prospect of political, crime and security risk,
while those in China and Southeast Asia have assigned environmental and health risks at a higher level than their counterparts in other
regions.
External Versus Internal Risks
The report, which breaks down risk priorities by region, from the U.S. to China, shows that top executives across sectors have similar
anxieties over external risks, such as currency fluctuation, availability of credit, customer retention, insolvency, and regulation. They
feel internal company pressures, such as corporate liability and reputational risks are under a high degree of control.
“The regional diversity of risk highlights the need for local understanding and clear risk reporting,” the report’s authors state. “For
multinationals seeking to invest in overseas markets or build a stronger international presence, it is clear that risk management must be
tailored to meet local challenges and opportunities.”
Lord Levene, Lloyd’s Chairman, warns that executives should be cautious about their own perceptions of corporate preparedness,
saying, “It’s completely understandable that companies focus on the latest problem, but good risk management needs to take into
account the broader risks and potential threats, and keep an eye on the horizon. What will disrupt business tomorrow is just as
important as what is faced today.”
Lloyd’s 360 Risk Insight focuses on emerging risks and has published a series of reports for business leaders, all available at
lloyds.com/360reports.
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