Volatility in equity markets. Falling oil prices. Global terrorism. Escalating healthcare costs. Uncertainties in political regimes in certain parts of the world. Disruptive technological innovation. Expanding regulation and oversight. Shifts in expectations about China’s economy. Strong U.S. dollar. These and a host of other significant risk drivers are contributing to the risk dialogue in boardrooms and executive suites.
Expectations of key stakeholders regarding the need for greater transparency about the nature and magnitude of risks undertaken in executing an organization’s corporate strategy continue to be high. Pressures from boards, volatile markets, intense competition, demanding regulatory requirements, fear of catastrophic events and other dynamic forces are leading to increasing calls for management to design and implement effective risk management capabilities to identify and assess the organization’s key risk exposures, with the intent of reducing them to an acceptable level.
This report from Protiviti and North Carolina State University’s ERM Initiative contains results from our fourth annual risk survey of directors and executives to obtain their views on the extent to which a broad collection of risks are likely to affect their organizations over the next year. Among this year’s key findings:
- Overall, survey responses suggest a global business environment in 2016 that is slightly more risky for organizations than it was in 2015, but not as risky as in 2014.
- There are growing concerns about the rapid speed of disruptive innovations and new technologies.
- Boards of directors, CEOs and other members of the executive team report differing views of the top risk exposures facing their organizations.
- Interestingly, CEOs and CFOs perceive a riskier environment relative to other members of management.
- On a global level, organizations see similar risks.
In presenting the research results, we discuss the overall risk concerns for 2016, including how they have changed from 2015 and 2014, followed by a review of results by size of organization and type of executive position, as well as a breakdown by industry, type of ownership structure, geographic location of their headquarters, and whether they have rated debt outstanding.