More so than their boards, risk professionals are keenly aware of how dangerous disruption can be
Risk managers are more concerned about the threat of disruption to their business than their boards are, according to StrategicRISK’s innovation and disruption survey.
Some 85.71% of risk managers in the StrategicRISK Asia-Pacific Advisory Panel were “concerned” or “very concerned” about the threat, compared to 76% of boards.
Interestingly, 16% of risk managers saw their board as “indifferent” (see graph, below).
“We need more buy-in from senior management,” said one risk manager.
“There needs to be an acceptance of disruption, rather than just paying it lip service,” said another.
So, what does this mismatch in perceptions around disruption risk mean for businesses? “If there’s not a very real understanding of the risk of disruption at the most senior level of a business, then it could prove fatal,” one chief risk officer said.
Indeed, Cisco predicts that 50% of Fortune 500 companies will fail in the next five years because they don’t embrace the Internet of Things (IoT).
The StrategicRISK Advisory Panel agreed; 67% of them chose the IoT as the technology that will have the greatest impact on their businesses within the next two years. Most respondents felt that the risk manager has a vital role to play in the face of these new advancements.
“It’s a difficult balance to manage risk without stifling innovation,” BPay chief risk officer Francesca Dickson told StrategicRISK.
“You don’t want to be seen as a handbrake, so risk managers should really try to involved at a company’s strategy level so they can truly understand the real appetite for risk and build that in to their processes.”
She said the disruptive environment might mean risk managers need to look at their own practices and reassess whether they were too process-driven. Most risk managers (71%) said it was part of their role to help their business navigate the challenges posed by disruption and innovation. And about the same number (70.81%) believe their role will increase in relevance as the threat of disruption increases.
“Peoples’ attitudes need to change,” said one. “The old cliche of embracing change is very appropriate. [We should] no longer see disruptions as negative, rather, there needs to be a mindset change to see innovations and ‘disruptors’ as helpful and even necessary in the continuing evolution of one’s business. A business that is static is a business that is stagnant.”
Dozens of respondents brought up the need for greater cross-department collaboration.
One said: “We need more cross-department conversations and to look at innovation as both an opportunity to break organisation silos and to create new, exciting products and services.”