Just one in every five UK companies employs a Chief Risk Officer. That’s according to research involving 250 UK business leaders conducted by Gallagher, the global insurance broker, risk management services and consulting firm. According to the company, this is leaving UK businesses exposed to commercial and operational risks without the necessary skills in place to manage them.
Where there isn’t a specialist role, in most cases the responsibility for managing risks falls to the CEO despite such individuals not having the required knowledge for this highly skilled role. Although the majority of businesses don’t employ a risk specialist, seven-in-ten (70%) business leaders believe that taking calculated risks is empowering and fundamental to sustained growth and, indeed, should form an integral part of growth planning.
A similar number (71%, in fact) of businesses acknowledge that they need to become more agile about how they assess risk, yet the reality is that, with UK companies so underweight in risk and compliance experience, they lack both the skills and mindset to assess and respond to evolving risks.
Commenting on the research findings, Carol Richmond (Chief Risk Officer at Gallagher), said: “At a time when technological change, rapid digital adoption and a whole host of other risks are presenting new and complex challenges to UK businesses, many organisations don’t have the specialist knowledge to identify what these emerging risks could mean for their business and are relying on CEOs to make significant risk decisions.”
Richmond continued: “It’s not simply about identifying risks facing the business. A key part of what a risk specialist will do is identify risk issues that should be prioritised. All businesses deal with risks on a regular basis, but it’s as important to have the knowledge to understand those that can be a game-changer for the business either in a positive or negative way. A lack of robust risk management and identification can greatly undermine the achievement of strategic goals. With the current lack of risk management skills in many businesses, it raises questions about the capacity of some of the UK’s senior leaders to take a strategic view.”
Importantly, Richmond added: “UK companies must ensure that they equip their teams to face the future with confidence and the ability to control emerging threats and opportunities.”
With three-quarters (75%) of business leaders identifying loss of reputation as a growing risk to their company, it’s now more important than ever that they’re able to map out where these risks sit within the business, how to mitigate them and also what crisis protocols are in place should a serious threat emerge.
This could be anything from who has control and access to a company’s social media channels to the influencers they engage with or the integrity of their supply chain and cyber security.
UK businesses are facing a myriad of short, medium and longer-term risks. Today, UK business leaders are most concerned about the impact of cyber attacks on their company, but believe a shortage in skilled workers is going to be the biggest driver of change over the next five years.
Over the next decade, however, seven-in-ten companies feel that regulation, policy and consumer behavioural shifts driven by environmental, social and governance factors are most likely to disrupt and impact businesses.
Despite Brexit and numerous other macroeconomic headwinds, UK businesses remain optimistic about the future. Four-in-five business leaders (80%) see opportunities for growth and expansion outweighing risks over the next five years and anticipate having the ability to commit significant capital expenditure to investment in technology.
Carol Richmond observed: “Amid current political and economic uncertainty, it’s easy to lose perspective on the much broader spectrum of risks facing UK companies beyond legislative and regulatory change, including cyber attacks, skills shortages, emerging technologies, climate change and loss of reputation. In the age of social media which gives more power to the consumer than ever before, it’s important that companies have responsible environmental policies in place, are socially aware and provide good governance. It’s key to remember that risk isn’t just a negative disruptive force, but an integral driver behind innovation and growth.”