Effective risk management proven to encourage growth
Risk is something that all businesses encounter in varying degrees. However, the difference between success and failure is not determined by the amount of risk faced, but rather how it is managed by those in charge.
PricewaterhouseCoopers (PwC) put together a report detailing these trends and found that, while companies are aware that risks are on the rise, few are making attempts to address them. If these are left unchecked they can have profoundly negative impacts on business development.
In its survey, PwC discovered that up to 73 per cent of executives feel the risks threatening their company are rising. To make matters worse, only about 12 per cent were determined to be risk management leaders. This provides a unique challenge for managers and executives who are tasked with hitting targets for growth without succumbing to undue risk.
"Risks are increasing dramatically and executives are constantly faced with making decisions to protect their businesses, while also trying to improve their financial performance," explained Dean Simone, leader of PwC's US Risk Assurance Practice.
"By integrating risk management into the business life cycle, these two objectives can easily come together to work in unison. Developing an effective strategy requires investment, but the payoff and competitive advantage can be enormous."
According to PwC, the key is to understand how risk and business growth interrelate, and to form strategies around them. This means business leaders cannot get away with ignoring risk, as this in turn will negatively affect growth opportunities. The key is to strike a delicate balance between the two, creating growth while minimising the potential impacts these decisions may have.
PwC discovered in its survey that 90 per cent of all risk management leaders take a "risk-enabled" approach to growing their respective businesses, further highlighting the need to engage with it in some way.