2017年-_BLWRJ~I

Deloitte Summary: Taking Aim at Value

Core Content

This document from Deloitte explores the current state of risk management in organizations, focusing on how it aligns with value creation. It highlights a growing overconfidence among senior stakeholders in their risk management capabilities and emphasizes the need for more strategic and proactive approaches. The role of the Chief Risk Officer (CRO) is also examined, with a call for greater alignment between risk management and business strategy, and for CROs to evolve from traditional roles to more strategic and collaborative positions.

Main Findings and Key Points

1. Risk Management and Value Creation

• Overconfidence in Risk Management: Senior stakeholders, including CEOs and board members, express high confidence in their risk management processes and integration with strategy, but this confidence is often misplaced.
• Misalignment with Value Creation: While 90% of organizations recognize that risk management should focus on value creation, less than 20% are actively taking steps to implement this approach.
• Strategic Risk Focus: Companies are increasingly aware of the need to manage strategic risks and opportunities, including innovation, disruption, and cybersecurity, but many are not prioritizing them sufficiently.
• Top Risks Today and in the Future:
  • Today: Sustainability/CSR (34%), Innovation/Disruption (33%), Legislative/Regulatory (22%), Mergers & Acquisitions (22%).
  • In 3 Years: Strategic Alliances (34%), Consumer/Market Concentration (19%), Talent (22%), Business Model Change (19%).

2. The Role of the CRO

• CRO Presence: 63% of respondents claim their organization has a full-time CRO or its equivalent, but this figure is considered inflated by the researchers.
• CRO Responsibilities: The CRO is expected to be a strategic partner, not just a risk manager. Their role includes:
  • Leading risk strategy.
  • Aligning risk management with value creation.
  • Engaging with the board and executive team.
  • Using data analytics and predictive tools to support decision-making.
• CRO Reporting Structure:
  • 66% of companies have the CRO reporting to the CEO, while only 10% report directly to the board.
  • This structure is seen as a shortcoming, as the board should be more involved in risk oversight to ensure strategic alignment.

3. CROs Need to Evolve

• Strategic Focus: CROs should shift from operational or stewardship roles to become catalysts and strategists.
• Skills Required:
  • Business acumen.
  • Strong communication and stakeholder engagement.
  • Critical thinking and persuasion skills.
• Future Priorities for CROs:
  • Strategist: Aligning risk management with strategic direction.
  • Catalyst: Engaging leadership in strategic execution.
  • Steward: Ensuring proper governance and oversight.
  • Operator: Managing structure, talent, and technology within the risk function.

4. Challenges in Risk Management

• Limited Use of Analytics: Only 50% of companies use sophisticated risk analytics regularly, and 15% always do so. This limits the ability to fully assess risk profiles and optimize opportunities.
• Underestimation of Emerging Risks: Despite the fast pace of technological and digital change, only a minority of companies include cybersecurity or technology disruption among their top three risks.
• Regulatory Overload: Many CROs are focused on meeting regulatory requirements rather than strategic risk management, which can lead to a misalignment with value creation goals.

Key Quotes

• Michael McCain, CEO of Maple Leaf Foods: "Treating risk management as something separate from the core business is recipe for ruin."
• Peter Harmer, CEO of IAG: "Business is all about risk and reward—strategy and risk are two sides of the same coin."
• Dean Yoost: "Unless you dedicate senior resources to the activity, the management of risk just isn't going to develop the way you probably intend for it to develop."
• Gerard Payen, CRO of Groupe Renault: "If anyone tells you [they have these risks fully covered], I'd say they were delusional."

Recommendations

• Self-Reflection and Action: Senior stakeholders should critically evaluate their risk management practices and take concrete steps to align them with value creation.
• CRO Development: CROs must be more than risk stewards; they must be strategic partners who engage with the board and business units to ensure that risk is managed proactively and aligned with organizational goals.
• Invest in Risk Analytics: Companies should invest in advanced risk analytics to improve decision-making and better understand their risk profiles.
• Enhance Board Engagement: Boards should take a more active role in risk oversight, particularly in understanding the strategic implications of risk and its role in value creation.

Conclusion

The document stresses that risk management is not just about avoiding losses but also about creating value. It calls for a shift in mindset, greater integration between risk and strategy, and the evolution of the CRO role to one that is more strategic and collaborative. With the increasing pace of change and uncertainty, companies must be more proactive in how they approach risk to remain competitive and sustainable.