According to a recent report by KPMG Nearly all C-level executives understand that risk management is an important ingredient in their businesses overall success. The report highlighted that 86% of the surveyed participants said that risk management considerations are to some degree factored into strategic planning decisions.
However, companies will have difficulty developing a strategic plan without knowing their appetite for risk, and whether they are taking on too much risk for a given level of return or too little.
Organisations may find they can afford to increase their risk appetite, assuming the business gains are high enough. But they won?t know if they don?t develop a framework of their appetite for risk. Indeed, a key question for executives is:
How to reach a common understanding of the company?s risk appetite, as part of the strategic planning process?
According to the survey results,
- Less than 19% of companies have developed a formal risk appetite statement.
- A further 22% say an appetite statement is being developed.
- Circa 40% say that a statement has been created, but not communicated across the organisation.
- And 19 % say it has not been developed at all.
These statistics show that there has been some progress in creating risk appetite statements, but businesses need to try harder to develop these statements for decision making.
(Source KPMG Expectations of Risk Management Outpacing Capabilities ? It?s Time For Action report)
Source: http://www.sayceib.com/how-important-is-risk-management-to-your-business/
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