With regulations mounting and organizations devoting more resources to compliance, a new poll suggests that companies are having a hard time with risk management.
The study, which was performed by advisory company PricewaterhouseCoopers, polled nearly 2,000 business executives in a variety of industries. Approximately three-quarters of respondents said that there was an increased level of risk that their companies were assuming. Additionally, when asked if these risks would continue, nearly 60 percent said they would increase due to regulations becoming more complex. Also, 50 percent of participants said that greater risk would be apparent because of the ever-changing nature of customers’ needs.
“In response to these dynamic shifts in the market, organizations across all sectors are undertaking dramatic business transformations, altering their strategies and driving radical internal change,” said Brian Schwartz, leader of data governance risk and compliance. “However, they may be missing a key issue – a sharp disconnect between top management and the risk and compliance functions. Not only are they disagreeing on the type and degree of key risks facing a company, but also about the organization’s capabilities.”
Establish a ‘risk leader’ culture
He added that as a result, it may behoove company managers and executives to devote more resources in order to help the company become a “risk leader.” To do this, a culture needs to be created in which more workers are aware of the risks that are out there and how they can be overcome by implementing specific strategies.
Those who have done so have benefited. The PwC poll found that nearly 60 percent of risk leaders were more likely to improve their analytic capabilities. They were also more apt to be building an integrated risk data management warehouse. Developing and upgrading regulatory tracking systems was also more likely among risk-mature firms.
Risk management is more effectively achieved through a compliant workforce, which financial executives say is a major challenge. Just 9 percent of CFOs in a Robert Half Management Resources survey said that compliance was easier today than in 2013. However, 1 in 5 said it was either “somewhat” or “significantly” more demanding.
Paul McDonald, senior executive director at Robert Half, indicated that business executives have to be in tune with their workforce as it pertains to how everyone is doing with compliance management. There may be instances in which professionals need to be called upon in order to identify where things are going wrong and what course corrections should be made.