A study commissioned by property insurer FM Global found that executives believe the biggest risk to be competition, followed by supply chain disruption and property-related risks. The survey, based on the views of 500 financial executives in Europe and America, found that 62 per cent of respondents expect risk from competition to increase through to 2009, while only four per cent expect it to decrease.
Nearly one-quarter of financial executives expect supply chain risk to increase, with only eight per cent expecting it to decrease. The top five emerging risks for corporations include changes in competition, government and regulatory developments, pricing volatility, variable client demand and political threats.
The survey found that while financial executives in Europe and North America share many of the same concerns about risk, there are a number of significant differences between the attitudes of executives based in the UK and those in France, Germany, the US and Canada. For example, when asked to list the consequences of disruption to their top revenue driver, UK based executives are more pessimistic than their peers in other countries: 62 per cent of UK executives polled said they were worried about the loss of competitiveness, compared with 51 per cent of other respondents.
Twenty-four percent of UK-based respondents say a disruption can lead to exiting a line of business or ceasing operations all together, and 21 per cent say it can lead to leadership changes. The corresponding figures for the survey as a whole were 10 per cent and eight per cent.
The study urges companies to develop strong, consistent risk management strategies that run across the whole enterprise.
"As the financial executives interviewed for this study warn, the price of major business disruption can far outweigh the cost of effective risk management," says Ruud Bosman, executive vice-president of FM Global.
"Organisations that may be tempted to short-change their risk management efforts face potential consequences ranging from the severe - a loss of competitiveness - to the catastrophic - having to cease operations altogether."
Source FM Global
Review by Nick Loney