We all know that, in what I have described as “The Age of Acceleration”—where the only constants are change the speed at which it is increasing—to accommodate recent yet fundamental change, enterprises of all sizes are busy transforming, and relying heavily on technology to do so. But while business transformation has become the order of the day, it has also transformed the nature of risk management.
Reality is the world is becoming a much riskier place and tech has a lot to do with it, along with helping solve the problems it causes. Consulting powerhouse PwC, in fact, is out with its new assessment of how transformation has changing the way businesses must look at risk, and the findings contained in PwC USRisk in Review report entitled, "Global risk in the transformation age," are worth a download and review.
A bit of background on business transformation
Based on a survey of more than 800 executives and risk managers in businesses worldwide, PwC's report notes that more than two thirds of companies have undergone a major transformation in the past 18 months, and another 10 percent plan to do so over the next 18 to 24 months.
PwC says this is a global phenomenon, and in response to major shifts enterprises are building new business models, tapping into digital channels and expanding into new markets. More importantly, they are in the process rethinking how their supply chains and the location of their facilities fit into their globalization strategies.
"Continued recessionary pressures, global financial shocks, increased taxation and excessive government austerity are top-of-mind risks for board members and executives because of the serious impact they can have on businesses," said Dean Simone, leader of PwC's US Risk Assurance practice. "Changes in business direction have also exposed companies to new risks, and the interplay of market and business transformation is creating complex risk linkages that can be fragile and difficult to predict. This complexity requires businesses to rethink their approach by taking a holistic, multifunctional view of managing risk."
These changes are adding further complexity to the global risk management, and the survey revealed that well-positioned businesses are taking decisive steps to bolster their risk management techniques to focus around four strategic response categories: resilience, people, technology and next-generation risk analytics.
The overall risks ahead
The overall concerns are an interesting mix and worthy of brief mention. They include:
"In today's unpredictable environment, companies need techniques to anticipate unknown risks and structures that are resilient to risks when and where they occur," added Simone. "Businesses can use horizon scanning and early-warning systems to spot trends, and employ stress testing to identify key vulnerabilities. More flexible risk appetite statements, corporate-wide contingency planning and a risk-aware corporate culture that challenges conventional wisdom are all powerful tools that can help organizations better manage emerging risks."
The four major risk response categories
Risk in Review outlines four strategic response categories in which forward-looking businesses are bolstering their risk management techniques to address business transformation-driven risks:
Business transformation is a broad topic that includes not just changing technology, but processes, business models, supply chain logistics and a host of other relationships – as well as culture. As can seen from the above, they all involve risks, and are driving a new look at risk management as a result.
What stands out here, setting aside political and economic concerns, are the ones involving technology – a critical tool in transformation and its impact on risks as well as possible rewards if risks are managed correctly. What the report implies, given concerns over failed technology implementations and the risks of incorporating things like social media, is the transformation of the role of IT and the need for better analytics.
The list is likely to not look that different this time next year, but how aggressively enterprises are responding should show up in changes in the responses. As a snapshot in time, however, the report is valuable, and as noted at the top, worth a download. And since metrics and best practices are always great to have, you might also wish to take a look at PwC's on-line benchmarking tool.
Follow the instructions and see how your company stacks up.
Digital advertising has exploded in recent years, with the latest eMarketer data forecasting $83 billion in revenue this year and continued growth on …
One of the biggest challenges for 5G and last mile 10 Gig deployments is not raw data speeds, but middle mile and core networks. The wireless industry…
Although a new and emerging technology, (which is still evolving), in early 2018, most companies are not aware of the possible benefits they can achie…
VR could change everything from how we play video games to how we interact with our friends and family. VR has the power to change how we consume all …
The app economy is upon us, and businesses of all stripes are moving to address it. In this age of digital transformation, businesses rely on applicat…