RiskTech Forum

What Drives European Risk Management Initiatives?

Posted: 31 October 2012  |  Author: Joe Crampton  |  Source: BPS Resolver

Across sectors, states and even regions, businesses have different motivations to run comprehensive risk management initiatives. Some may fear the ramifications of natural disasters, while others worry about jeopardizing shareholder trust. Financial losses, reputational detriments, missed opportunities – there are literally dozens of reasons that companies invest so heavily in risk management solutions.

For European companies, legal, regulatory and compliance threats tend to be the main external factors that drive risk management efforts. This is according to a new survey from the Federation of European Risk Management Associations, which polled risk leaders throughout the region.

Nearly two-thirds of respondents (61 percent) cited legal, regulatory or compliance requirements as reasons they are investing heavily in their risk management programs. While these were the leading concerns, the number of businesses citing these requirements as top drivers decreased from 70 percent in 2010. Shareholder requirements were noted by 33 percent of respondents (down from 39 percent), while 31 percent acknowledged corporate social responsibility (down from 34 percent).

Perhaps the most surprising statistic from the report is the decline in the number of companies concerned with natural disasters. In 2010, nearly half of respondents (45 percent) said severe weather events and other catastrophes were main factors in their risk management initiatives. That number is down to 26 percent, despite more of these disasters seemingly happening each year.

Assessing Risk
How are European companies able to assess which risks they need to prioritize? Obviously, many businesses have shifted the focus of their threat management programs over the past two years, and there are set strategies they use to determine which aspects to zone in on.

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