EMEA companies lack time, resources to keep pace with emerging business risks

A lack of management attention and skilled resources, management tools and processes are working together to hamper the ability of companies to manage a range of new and emerging risks, note survey results published Tuesday by ACE Group.

“Our research suggests that emerging risks have not yet become embedded in board level discussions on wider risk management issues,” Andrew Kendrick, president of ACE European Group, says in a statement from ACE, one of the world’s largest multiline property and casualty insurers.

Almost six in 10 respondents (57%) cite “lack of management attention as the biggest barrier, and this leads, in turn, to the second and third challenges – lack of human resources and lack of risk management tools and processes,” Kendrick continues.

Findings reflect responses from a telephone survey last summer of 650 senior executives for companies in 15 countries in Europe, the Middle East and Africa (EMEA). The survey – conducted by Longitude Research on behalf of ACE’s EMEA Emerging Risks Barometer 2013 – involved executives with responsibility for risk management across a range of industries and who worked for larger or mid-size companies. More detailed interviews were also conducted with a range of senior corporate risk managers and others with expertise in the field.

ACE reports that busy management teams are struggling to keep pace with a range of new and emerging risks that pose significant financial risks to their business. Overall, at least 40% of companies polled view supply chain and infrastructure dependency, environmental liability, cyber risk, and directors and officers (D&O) liabilities as the emerging risks likely to have the most significant financial impact on their company in the next two years. More specifically:

• 45% cited supply chain and infrastructure risk – sophisticated global supply chains have driven down costs for many companies, but businesses are paying the price through a lack of visibility into where risk exposures lie;
• 42% cited environmental risk – there appears to be an increasing awareness that this is an issue for all sectors, not just traditional “polluting” industries, with 73% of respondents reporting their shareholders are taking environmental risk more seriously;
• 40% pointed to cyber risk – 49% cite viruses, 38% cite hacking and 37% cite data theft by third parties among their greatest concerns, although 63% believe employees and internal failures can often pose a bigger threat than cyber criminals; and
• 40% noted D&O liability risk – in the wake of increased scrutiny post-crisis, respondents highlight reporting errors as their greatest worry, followed by concerns about exposures to bribery, fraud and corruption.

“We know that real-world events do not respect neat categories, and that many of our emerging risks are interconnected today,” Kendrick says in the statement. “By paying greater attention to this complex and interlinked array of emerging threats and challenges, risk managers can help their organizations to put their strategic plans on a sustainable footing.”