Survey finds risk management still low on the agenda of boards

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StrategicRISK’s survey reveals continual disconnect between risk managers and the board

It is only natural for everyone to want to be heard equally. But in the realm of modern business, where boards are contending with ever-increasing regulatory constraints, it is little wonder that the risk management function struggles to be heard over the din.

In order to give a much-needed voice to risk managers, StrategicRISK conducted a survey of its European risk manager and corporate insurer readers between September and November 2013. Survey participants ranged from financial services to construction, energy, retail, manufacturing and utilities industries, with annual company revenues between £15m and in excess of £800m.

The survey results are divided into three sections – risk management in companies, risk executives and risk managers, and engagement with the board. Sponsored by FM Global, it identifies key concerns and looks at what could be done to better balance the board focus between the revenue generating side of business against the reporting and risk function.

Numerous provocative findings came out of the survey, but the most interesting points are below:

The majority of respondents (54%) believed that, despite the issues with being heard within the walls of a board meeting, the position of chief risk officer should not be a board-level position.
Around 86% of respondents said their boards did not believe that risk is primarily about insurance, as often previously assumed. But equally, respondents also felt that the insurance industry could assist risk managers in board engagement further by clearly demonstrating the value of risk management in terms of premiums.
Regulatory risks rated as one of the highest interest areas to a board, while political risks rated equally as a low-interest issue for boards.
Eighty-six percent of respondents agreed that board engagement with the risk management function had increased over the past five years throughout the financial crisis, although a further 14% reported there was still no engagement at all with their board.
While many respondents claimed that there was a lack of true communication between risk managers and the board at their respective companies, 71% of survey respondents said that the risk culture for their business did in fact emanate from the board down.