The biggest challenge in improving enterprise risk management is the complexity of implementation, according to 45.9 percent of respondents of a Deloitte online poll.
"Executives relying on conventional wisdom often miss the unconventional realities that can make risk management appear insurmountably complex," said Frederick Funston, a principal with Deloitte & Touche LLP and author of the recently released book, Surviving and Thriving in Uncertainty: Creating the Risk Intelligent Enterprise.
Respondents reported that most risk management initiatives spearheaded by senior leadership within organizations are focused on developing sustainable and repeatable skills, processes, and tools (29.7 percent) and improving the transparency of risk management for the board, employees, and other key stakeholders (17.9 percent).
Meanwhile, target areas for improvement include failure to challenge fundamental business assumptions (22 percent); inability to anticipate potential causes of business failure (15.6 percent); and failure to maintain constant vigilance for threats and opportunities (13.1 percent).
Funston recommends that executives and boards work toward risk intelligence as opposed to mere risk management. Methods he recommends include acting on knowledge on-hand, but being prepared to adapt; creating the tone at the top to incorporate risk intelligence into core business processes; leveraging the best of organizational culture, while improving cross-functional preparedness and coordination; focusing efforts on the few vital risks and opportunities, as opposed to ones that are trivial; and demanding discipline and accountability in execution by linking metrics to compensation and performance management.
The poll was taken during an April 2010 Deloitte webcast, which included more than 1,650 business professionals from the following industries: consumer and industrial products; financial services; technology, media, and telecommunications; and energy resources.