Study: Businesses are insufficiently prepared to manage enterprise risks

Written on Mar 15, 2023

A new study evaluating the state of enterprise risk management (ERM) at midsize to large enterprises across industries in the North America, Europe, and APAC regions shows those businesses aren’t prepared.

The research conducted by AI company Dataminr found that organizations encounter significant organizational, strategic, and technological barriers on their way to implementing an effective ERM strategy. The study also found that nearly 70% of respondents said their organizations experienced at least two separate critical risk events in the past year, while over 40% experienced at least three, and nearly 20% suffered six or more incidents.

The survey found that 70% of respondents believed that optimized, real-time alerting would have helped them significantly or totally reduced the harm of the most serious or disruptive events their organization faced last year. At this time, 56% of respondents indicated they don't have real-time alerting solutions in place today, but 62% plan to implement or expand their use of such tools, and 54% plan to increase investment over the next 12 months.

Key findings:

Many risk leaders are taking too narrow a view of the systemic risks their organizations face. Business risk will become more, not less, complicated to manage in the future, and fewer than a third of risk leaders completely agree that risks to their business can come from anywhere.
Risk strategies have significantly advanced over the past few years, but still have a long way to go. Just 36% of respondents have a C-suite champion leading risk management today.
Cybersecurity and real-time alerting capabilities will be a major area of focus going forward. Respondents were most likely to cite cyber risk tools and real-time alerting capabilities as the most critical features their next risk management platform must include.
Successful ERM implementations are driven by aligned leadership, vision and technology. Organizations with highly effective ERM strategies were 27% more likely to have a C-suite leader for ERM, compared to those from lower-maturity organizations. C-suite champions are empowered to work across organizational silos and to coordinate with other business leaders within the organization.

In addition to the above key takeaways, the survey also found that only 18% of respondents reported that their current ERM strategies are effective or very effective across all five capabilities surveyed, including identifying, evaluating, monitoring, responding to, and communicating about risk.