Insufficient risk control endangers companies

"Old ways of assessing risk are inadequate in today's global business environment if leaders want to ensure the sustainability and success of their company," said Davide Vassallo, global managing director at DuPont Sustainable Solutions. "Running a successful business today is more complex than ever before. Leaders must overcome numerous internal and external challenges on a daily basis. With these challenges come numerous risks that leaders must successfully anticipate and minimize. Leaders achieve transformation in their organizations when they integrate risk into the business strategy. By doing so, they can engage employees, improve productivity and increase their competitive advantage."

Implementation is a problem

According to the study conducted worldwide "Global Operations Risk Survey 2018" from DuPont Sustainable Solutions (DSS), the results show that while respondents generally agree on the key attributes of a successful risk management program and are well aware of their importance. But executives are failing to implement these attributes in their own organizations, DSS writes. This failure is evident in the following ways, according to the study:

• Managers do not sufficiently prioritize risks that can result in serious incidents. It appears that executives are lulled into a false sense of security due to the low frequency of incidents and are not paying attention to signs of potentially serious events. While 78% of survey respondents agree that a low number of incidents does not necessarily mean that risk is also decreasing, two-thirds of executives still admit to feeling safe when they see data indicating that the number of incidents is low or tending toward zero.
• The executives surveyed agree that it is important to have risk management systems that are integrated, complement each other and are regularly reviewed for effectiveness. Nevertheless, 44% of survey respondents admit that gaps in existing systems pose a challenge to their organization.
• Executives confirm that there is a divide among employees on how to manage risk. A quarter of respondents believe their frontline employees have a divergent view of the most important risks to the business. More than half (55%) think senior leaders also disagree on the most important risks to the business, an increase of 35% from the 2017 DSS survey. This points to a growing gap in commitment to security between executives and employees that is preventing organizations from effectively identifying and mitigating risks.

Who participated?

DSS's annual global executive risk management survey compares and measures the maturity of operational risk management programs in organizations across a wide range of industries. The survey also highlights the challenges companies face in effectively managing risk and improving business performance. Executives from more than 350 companies participated in the survey, which was conducted from May to August 2018. Half of the participants (52%) are senior executives (CEO, CFO, etc.), while the other half (48%) are general managers. 60% of the participating companies operate in industries associated with high risks (e.g., mining, metal processing, oil and gas, manufacturing). About two-thirds of participating companies have a global presence. 44% are headquartered in North America, 27% in Asia Pacific and 24% in Europe, DDS concludes.