In this year’s PwC Risk in Review survey of 1,229 senior executives and board members, 73% of respondents agreed that risks to their companies are increasing. Today’s business leaders often have to respond quickly to a changing world, even as they are obliged to supply more data to regulators and potential deal partners, better understand the risks embedded within their global supply chain, guard their firms from market uncertainty, and protect their intellectual property and customer data from increasingly sophisticated and widespread cyberthreats.
The survey shows companies are not, largely, responding to this environment with improved risk management programs. Despite the fact that survey results show clearly that an eagerness to confront business risks boosts management effectiveness, prevents costly misjudgments, drives efficiency, and generates higher profit margin growth, only an elite group of companies (12% of the total surveyed) have put in place the processes and structures to make them true risk management leaders.
Rather than inhibiting performance, these leading companies’ focus on proactive risk management actually helps them build a stronger bottom line. They’re able to link business risks with their strategic imperatives, and are more likely to have achieved an annual profit margin of greater than 10% over the past three years, and better profit margin growth.