Companies rethink risk management in changing world: Survey

The events of 2011, including natural catastrophes and evolving technologies, are driving changes in many companies' risk management focus and include a greater emphasis on the chief risk officer function, a new report from PricewaterhouseCoopers L.L.P. suggests.

The study is based on a November 2011 survey of more than 1,000 executives and risk management leaders from a broad range of companies worldwide. The combination of economic turmoil, natural disasters, advancing globalization and rapid technological advances created a riskier marketplace in 2011, marked by complexity, unpredictable events and sudden change, survey respondents indicated.

In response, PwC reported, companies are shifting their risk management focus in several ways: from internal to external, from operational to strategic, and from bottom-up to top-down. According to PwC, as corporate leaders recognize the far-reaching impact of risks on their businesses, they are installing new risk management structures and processes in their organizations.

With those changes, the CRO role, previously largely a financial services industry function, is emerging in many other types of firms, PwC said. The role requires a risk manager who is strategic, collaborative and business-focused, the report said, with the new CROs being given the opportunity to have an impact on business decisions and operations.

The PwC report suggested the creation of the CRO function in organizations is likely to gain momentum in 2012, with chief risk officers getting greater access across their organizations' various functions and the opportunity to influence decision making.

The PricewaterhouseCoopers report, “Risk in Review 2012: Rethinking Risk Management for New Market Realities,” can be found at www.pwc.com.