Forecasting Emerging Risks Expected to Increase in Difficulty; Shifts in Cyber & Regulations Remain Top Concerns: Marsh/RIMS ...
April 11 2016 - 9:00AM
Business Wire
Most risk professionals believe that forecasting risk will not
get any easier in the next three years, with cyber-attacks and
regulation topping the list of areas from which emerging risks will
likely arise, according to a new report published jointly today by
Marsh, a leading insurance broker and risk advisor, and a
wholly-owned subsidiary of Marsh & McLennan Companies, Inc.
(NYSE:MMC) and RIMS, the risk management society™.
The 13th annual Excellence in Risk Management report finds that
while risk professionals are increasingly relied upon to identify
and assess emerging risks, there remain organizational and other
barriers to providing that critical view “around the corner.”
Nearly half of survey respondents — 48% — said that forecasting
critical business risks will be more difficult three years from
now; with another 26% saying it would be the same.
This year’s Excellence survey sought to better understand how
organizations view emerging risks facing their organizations and
the tools they use and barriers they face in assessing, modeling,
and understanding them. According to the findings, a majority of
respondents — 61% — cited cyber-attacks as the likely source of
their organization’s next critical risk. This was followed by
regulation, cited by 58% of the respondents, and talent
availability, cited by 40% of the respondents.
“Whether emerging risks are on your doorstep, around the corner,
or on the far horizon, they have the potential to catch
organizations unaware,” said Brian Elowe, Marsh’s US client
executive leader and co-author of the report. “It’s important for
risk professionals to maintain awareness of global risk trends, and
to make the connection to their organizations’ business
strategy.”
Based on the survey responses and insights from numerous
Excellence focus group discussions, it became clear that risk
professionals generally agree on the importance of identifying
emerging risks, and also that there is no clearly established
framework for doing so. More can be done to better identify,
assess, and manage the impact emerging risks may have on
organizations.
For example, a majority — 60% — of the risk management
respondents said they use claims-based reviews as one of the
primary means to assess emerging risks, compared to 38% who said
they use predictive analytics.
“The widespread use of claims-based reviews means that a
majority of organizations are relying on studying past incidents to
predict how emerging risks will behave rather than using predictive
analytic techniques like stochastic modeling and game theory to
help inform their decision making,” Mr. Elowe said.
Survey respondents also cited several barriers to understanding
the impact of emerging risks on their business strategy and
decisions with lack of cross-organization collaboration ranking
first among risk professional respondents.
“Lack of collaboration across the organization is still an issue
for many risk professionals. On the other hand, breaking down silos
has become less of a concern for executives,” said Carol Fox, VP,
strategic initiatives for RIMS and co-author of the report.
“Tackling emerging risks often requires creative yet pragmatic
approaches. It has to encompass internal cross-functional
conversations — formal and informal — around the intersection of
risk and strategy, senior-leadership engagement, and tapping into
external information sources. Risk professionals are encouraged to
broaden the scope and collaboration around emerging risk issues
within their organizations.”
The Excellence survey, Emerging Risks: Anticipating Threats and
Opportunities Around the Corner, is based on more than 700
responses to an online survey and a series of focus groups with
leading risk executives in January and February 2016.
Findings from the survey were released today at the RIMS 2016
Annual Conference & Exhibition. Copies of the survey are
available on www.marsh.com and www.rims.org.
About Marsh
Marsh is a global leader in insurance broking and risk
management. Marsh helps clients succeed by defining, designing, and
delivering innovative industry-specific solutions that help them
effectively manage risk. Marsh’s approximately 30,000 colleagues
work together to serve clients in more than 130 countries. Marsh is
a wholly owned subsidiary of Marsh & McLennan Companies (NYSE:
MMC), a global professional services firm offering clients advice
and solutions in the areas of risk, strategy, and people. With
annual revenue of US$13 billion and approximately 60,000 colleagues
worldwide, Marsh & McLennan Companies is also the parent
company of Guy Carpenter, a leader in providing risk and
reinsurance intermediary services; Mercer, a leader in talent,
health, retirement, and investment consulting; and Oliver Wyman, a
leader in management consulting. Follow Marsh on Twitter,
@MarshGlobal; LinkedIn; Facebook; and YouTube.
About RIMS
RIMS, the risk management society™, is a global not-for-profit
organization representing more than 3,500 industrial, service,
nonprofit, charitable and government entities throughout the world.
Dedicated to advancing risk management for organizational success,
RIMS brings networking, professional development and education
opportunities to its membership of more than 11,000 risk management
professionals located in more than 60 countries. For more
information, visit www.RIMS.org.
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version on businesswire.com: http://www.businesswire.com/news/home/20160411005279/en/
MarshSally Roberts, +1
347-281-1454sally.roberts@marsh.comorRIMSJosh Salter, +1
212-655-6059jsalter@rims.org
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