Digital risks continue to be the most significant threats to business:FERMA Survey
Digital risks continue to be the most significant threats to business in the short (12 months) and medium-term (3 years). Cyber threats are the number 1 risk in both time frames, and data theft and fraud are growing in importance and stand at number 4 in the short term. Uncertain economic growth appears as the number 2 threat short term (12 months) and number 3 medium term (3 years).
The Federation of European Risk Management Associations on Monday released the results of the 2020 European Risk Manager Report. This is the 10th edition of the report which represents the widest available information from professional risk managers across Europe. It has taken placed every other year since 2002.
The President of FERMA Dirk Wegener said: “This survey took place before the implications of COVID-19 were clear, but we can see that the risk manager is strengthening his or her contribution to the recovery and sustainability of the organisations.”Risk landscape
Digital risks continue to be the most significant threats to business in the short (12 months) and medium-term (3 years). Cyber threats are the number 1 risk in both time frames, and data theft and fraud are growing in importance and stand at number 4 in the short term.
Uncertain economic growth appears as the number 2 threat short term (12 months) and number 3 medium term (3 years).
Risks related to sustainability are two of the top three risks in the long term (10 years) with climate-change and environment damage the number 1 risk and extreme weather events number 3.
Dirk Wegener said: “The Covid-19 crisis heightens the importance of the top concerns of risk managers as shown in the report: digital risks, economic uncertainty and sustainability. Today, the priority given to these risks might be different, depending on the business sector, but their overall importance would not change.”
A hardening insurance market is an issue for risk managers. The report shows:
-90% are concerned about limitations and exclusions for emerging/specific risks.
-88% are concerned about changes in market conditions.
-68% are concerned about concentration in the insurance market.
One consequence is renewed interest in captives with 43% of risk managers considering this option compared to 15% in 2018. 27% of risk managers say they will use an existing captive for hard to place risks compared to 1% in the 2018 survey. 16% of risk managers plan to create a new (re)insurance captive compared to 14% in 2018.
Dirk Wegener said: “Post Covid-19, we are seeing a market that is unsettled and tougher, as insurers deal with losses on both sides of the balance sheet. Capacity for some lines of cover may be very limited and expensive. The insurance risk manager’s skills and experience will be especially valuable in protecting their companies at this time.”
The risk management profession
The strategic role continues to grow:
-60% of risk managers assess risks related to the different strategies considered by their organisation during its strategy definition (2018 – 47%) and 59% assess risks related to the non-alignment of the organisation’s strategy with its mission, vision and core values and core values (2018 – 41%).
-67% of the risk managers use innovative technologies in their activities: data analysis, data visualisation, process automation and/or artificial intelligence.
-More than half the risk managers work closely with IT and information security on cyber risks or have it within their team. More than one-third of risk managers are directly involved in the management of risks related to the adoption of new technologies by their organisation.
-40% of survey respondents say they are already playing or are planning to play a specific role regarding environmental, social and governance-related (ESG) risks.
Said Dirk Wegener: “Risk managers are increasingly taking advantage of innovative technology to enhance risk measurement, analysis and treatment. This is essential for us to manage the lessons learned for the post COVID-19 world for our organisations.”