{"id":2102,"date":"2013-03-16T07:32:31","date_gmt":"2013-03-16T07:32:31","guid":{"rendered":"http:\/\/www.chaordicsolutions.co.uk\/blog\/?p=2102"},"modified":"2013-03-16T07:32:31","modified_gmt":"2013-03-16T07:32:31","slug":"economy-and-regulations-are-top-risks-for-organisations","status":"publish","type":"post","link":"https:\/\/www.chaordicsolutions.co.uk\/blog\/from-our-risk-management-consultants\/economy-and-regulations-are-top-risks-for-organisations\/","title":{"rendered":"Economy and regulations are top risks for organisations"},"content":{"rendered":"

\"businesscontinuitymini\"<\/a>Economy and regulations are top risks for organisations: greater need for transparency into nature and magnitude<\/p>\n

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Extract from CFO – Caroline McDonald:<\/strong><\/p>\n

The top two risks identified by executives send the message that they are more concerned with what they don\u2019t know, regarding economic conditions and regulations, than with what they do know, even about significant operational risks, according to an author of the study\u00a0Executive Perspectives on Top Risks for 2013.<\/a><\/em><\/p>\n

James DeLoach, a managing director at Protiviti and a risk management expert, said the study, conducted with North Carolina State University\u2019s ERM (enterprise risk management) Initiative, suggests \u201cthe importance of policymaking and of politicians and government to create an environment that is more predictable, to take the cap off of the economy.\u201d<\/em><\/p>\n

While the top risks pertain to strategic and macroeconomic issues, \u201cFive of the top-10 are operational issues, but they are in the bottom half,\u201d he explains. \u201cThat says that directors and executives are more concerned about what they don\u2019t know than what they do know.\u201d<\/em><\/p>\n

The survey asked more than 200 board members and executives across a wide variety of industries about the risks their organizations expect to face in 2013. Participants were asked to rate a list of 20 risk issues on a scale of one to 10, with one indicating \u201cno impact\u201d and 10 indicating \u201cextensive impact.\u201d<\/em><\/p>\n

The two risks that stood out as being of highest concern were:<\/em><\/p>\n

– Perils relating to profitability constraints because of economic conditions that could curb growth.<\/em><\/p>\n

– Possible regulatory changes and heightened regulatory scrutiny that could curb the production and delivery of products and services.<\/em><\/p>\n

\u201cWhat that says is that most people are used to a more rapidly growing environment,\u201d DeLoach said. \u201cWe\u2019re growing in the U.S., but at a slower pace. People are trying to get used to that, but it\u2019s a different game than they have been used to over the course of their careers.\u201d<\/em><\/p>\n

That issue, he said, \u201cis paramount as a significant impact risk. [Company executives] are having to modify their approach to the market\u2026given the fact that we have slower growth in the economy.\u201d<\/em><\/p>\n

The second, regulatory risk, was significant for most of the survey respondents, “when you think about Dodd-Frank in financial services and the Affordable Health Care Act, which affects health care providers and also their cost structure,\u201d he says.<\/em><\/p>\n

Citing a second example of regulatory pressures, the risk management consultant cited the restaurant and consumer products industries which face issues like those stemming from the Foreign Corrupt Practices Act anti-bribery provisions \u201cand the unprecedented prosecutorial cooperation across borders on corruption issues.\u201d<\/em><\/p>\n

A third risk, he says, is related to growth opportunities and companies\u2019 being restricted \u201cby the uncertainties surrounding political leadership for national and international markets, particularly in developing countries with political stability issues.\u201d<\/em><\/p>\n

While companies understand their operational issues and are concerned, DeLoach said, \u201cwhen you\u2019re talking about the issues around regulatory risk and the growth in the economy and political issues, that creates an environment of uncertainty that makes it difficult to hire and invest.\u201d<\/em><\/p>\n

What this does, he said, is change the game of planning away from one-dimensional strategies. \u201cIn these rapidly changing times, if you set strategy with a single view of the future, that can be very dangerous. You have to have multiple views of the future, assess scenarios and stress test your plan,\u201d he explains.<\/em><\/p>\n

What\u2019s more, one of the operational risks identified was resiliency and adaptability. \u201cTo be adaptive means you have to shift and change as markets evolve and customer preferences change,\u201d he says.<\/em><\/p>\n

Other survey highlights included:\u00a0<\/em><\/p>\n

– Most respondents rated the current environment as significantly risky and said they’re likely to make changes or deploy more resources to managing their respective risk over the next year.<\/em><\/p>\n

– Chief risk officers (CROs) and CFOs were the executives with the highest ratings in terms of their likelihood to make changes.<\/em><\/p>\n

– The biggest outfits rated the greatest number of risks as \u201cSignificant Impact\u201d risks, reflecting the complexities of their operations.<\/em><\/p>\n

– Companies in the financial services, health-care and life sciences, and technology, media and communications organizations industries reported the greatest number of significant risks.<\/em><\/p>\n

More …<\/strong> http:\/\/www3.cfo.com\/article\/2013\/3\/regulation_erm-international-risk-protiviti-nc-state-university-deloach-<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Economy and regulations are top risks for organisations: greater need for transparency into nature and magnitude  <\/p>\n","protected":false},"author":1,"featured_media":36,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[23],"tags":[36,39,37,38,101,102],"_links":{"self":[{"href":"https:\/\/www.chaordicsolutions.co.uk\/blog\/wp-json\/wp\/v2\/posts\/2102"}],"collection":[{"href":"https:\/\/www.chaordicsolutions.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.chaordicsolutions.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.chaordicsolutions.co.uk\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.chaordicsolutions.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=2102"}],"version-history":[{"count":11,"href":"https:\/\/www.chaordicsolutions.co.uk\/blog\/wp-json\/wp\/v2\/posts\/2102\/revisions"}],"predecessor-version":[{"id":2113,"href":"https:\/\/www.chaordicsolutions.co.uk\/blog\/wp-json\/wp\/v2\/posts\/2102\/revisions\/2113"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.chaordicsolutions.co.uk\/blog\/wp-json\/wp\/v2\/media\/36"}],"wp:attachment":[{"href":"https:\/\/www.chaordicsolutions.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=2102"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.chaordicsolutions.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=2102"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.chaordicsolutions.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=2102"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}