Transforming Risk Into From Protection To Creating Business Value
Most Critical Strategic Risks Today
According to the survey, reputation is now the biggest risk concern. This is due in large measure to technologies such as social media that enable instantaneous global communications, making it harder for companies to control how they are perceived in the marketplace. Not to mention the time – or lack thereof – that companies have to respond to a crisis that’s reputational in nature once it erupts. Technology itself is also cited as a major source of strategic risk, with 53% of companies saying that technology enablers and disrupters – such as social media, mobile, analytics, cloud computing, and big data – could threaten their established business models. Together, these new technologies are changing the way businesses are run and managing the risks associated with them is likely to remain a strategic priority for the foreseeable future.
In a world shifting and changing due to new technologies, geopolitics, economies, global finance, risks are not only increasing, but various types of risk as well.
Different from Operational, Financial or Compliance Risk, Strategic Risk is that risk that impact a business strategy decision or are created by those decisions.
94% say they aren’t just increasing their focus on managing strategic risks; they are changing how they do it – most often by incorporating strategic risk management into their business strategy and planning processes.
Reputation Digital Asset Performance Techonology Changes
How is strategic risk different from other types of risk?
Strategic risks are risks that have a major effect on a company’s business strategy decisions, or are created by those decisions. So they tend to have a larger and more widespread impact than the other types of risk that businesses have traditionally focused on, in areas such as operations, finance, and compliance. For example, the shift from mature markets to emerging markets as the world’s primary growth engine presents a company with strategic risks that affect every part of the business.
In the past, companies had more time to respond to strategic risks, so they could afford to follow more of a “wait and see” approach. But now, technology innovations, along with relatively new trends in mobility usage, social media and rapidly expanding connectivity – combined with globalization – have created a business environment of strategic impact, where even a small local problem can almost instantly develop into a worldwide crisis.
How are companies respondingto this new focus onstrategic risk?
Strategic risk has become a CEO and board-level issue. In our recent survey1, 67% of companies said their CEO, board, or board risk committee now has direct oversight for managing strategic risk. Moreover, the vast majorities of companies have changed their approach to strategic risk management over the past three years by:
Increasing the frequency and budget for monitoring and managing strategic risks.
Monitoring and managing strategic risks continually.
Increasing the number of executives allocated to managing strategic risks.
What was wrong with the old way of managing risk?
Traditional approaches to managing risk tend to focus on monitoring leading financial indicators and keeping tabs on regulatory changes. That’s still an important exercise. But the resulting risk strategies and hedges – because they are mostly grounded in audited financial statements – are generally backward-looking and reactive. A fresh approach to strategic risk management enhances the detection of future strategic risks and predictions of future performance. This universal view of risk is crucial to staying ahead of risk as well as the competition.
according to a recently published global survey of more than 300 companies, conducted by Forbes Insights on behalf of Deloitte, today's rapid change in technologies such as social media, mobile devices, big data, analytics and the cld
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