Reputation leads companies' business strategy risks: Study
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Reputation risk has emerged as the top strategic risk for companies, according to a study released Tuesday by Deloitte Touche Tohmatsu Ltd.
Of more than 300 major companies worldwide surveyed last spring by Forbes Insights on behalf of New York-based Deloitte, 40% cited reputation as the top risk to their business strategy, up from the No. 3 spot in 2010.
Of those surveyed, 32% identified their business model as their second-greatest strategic risk, with economic trends/competition ranking third, cited by 27%.
Overall, the study found that companies are increasingly focusing on strategic risk, with 81% of those surveyed saying their company has an explicit focus on managing strategic risk. They're also adapting their approach to strategic risk management, the survey showed, with 94% reporting they'd changed their approach to managing strategic risks in the past three years.
Of those surveyed, 61% said they think their strategic risk management efforts are performing well or very well in supporting their companies' ability to develop and execute business strategy. The survey also showed that company boards and C-suite executives are driving strategic risk management, with 67% of respondents saying that the CEO, board or board risk committee has oversight over strategic risk.
The survey identified three specific areas most companies are focusing on to improve their strategic risk management capabilities and performance: increasing the frequency and budget for managing strategic risk, 52%; continuous monitoring of strategic risks, 43%; and increasing executive staffing assigned to strategic risk management, 38%.
The Deloitte report, “Exploring Strategic Risk,” can be found here.
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