Despite significant investments in improving their risk management capabilities in the three years since the financial crisis began, most executives still rate their companies as “ineffective” or only “moderately effective” at incorporating emerging risks into their decision making.
That general lack of progress in improving risk management practices is among the findings in the second Oliver Wyman/Financial Times survey of 650 senior executives at large companies around the world. The survey, which concluded in April of 2010, offers a snapshot of what executives consider to be the biggest risks to their businesses and evaluates their methods to identify and assess potential threats.
The results clearly show that even with their renewed focus on managing risk, most companies still fail to integrate information about emerging risks into their decision making. Emerging risks are defined as both new risks, such as the 2010 eruption of volcanic ash in Iceland, and familiar risks in unfamiliar conditions, as when volatile commodity prices suddenly become some of the largest costs for businesses such as airlines and consumer products manufacturers.