With the pandemic and the current geopolitical environment, the world has seen a slew of swift yet unprecedented responses from governments and businesses. To tackle risks to revenue growth, companies have begun to spend more on risk management, according to a PwC report.
Regardless of industry sector, risks such as talent management, supply chain, regulatory compliance, cyber threats and ESG are likely to impact organisations’ strategies and operations.
At last count, more than 400 companies had curtailed or stopped operations in Russia to comply with sanctions or to express their values, said the report.
Meanwhile, technology firms are being enlisted on the communication and cyber front lines in allied and partner countries for a war that’s being fought not only on the ground but on social media as well.
According to the 25th Global CEO Survey, Ransomware -- a malware that prevents users from accessing their system and demands a payment to regain access -- attacks are more frequent, propelling cyber’s rise to the top threat to business among CEOs.
And "this is just the beginning," said the PwC report.
Additionally, supply shortages, sanctions and rising raw material costs are heightening risks within supply chains as organisations deal with upstream supply chain risks related to third party risks such data breaches, privacy violations, cloud risks, software supply chain risks and technology vendors.
The report suggests that business can use KRIs (Key Risk Indicators), to measure and monitor these risks, as they provide early-warning signals.
However, another PwC report said, nearly a quarter have little or no understanding at all of these risks — a major blind spot of which cyber attackers are well aware and willing to exploit.
On the other hand, while managing disruptions, organisations are simultaneously dealing with internal digital transformation challenges.
According to the report, 79 percent say that keeping up with the speed of digital transformations is a significant challenge.
Organisations that have managed to surpass these challenges, the report said, have invested in the right resources such as good analysis and modelling.
However, less than 40 percent of business executives are reaping the benefits of consulting with risk professionals.
Investment in risk processes, frameworks and enabling systems is needed to help an organisation deploy a standardised and consistent approach to risk management, suggested the report.
While 75 percent of organisations report that having technology systems that don’t work together is a significant risk management challenge, just 35 percent of those are addressing that challenge in a formal, enterprise-wide manner.
Additionally, amid recently proposed SEC climate disclosures, customers, investors and other stakeholders are laser-focused on ESG (Environmental, Social and Governance).
Each of these risks can cause significant impacts, but because they are also highly interconnected, the report said. What may start as a technology breach can quickly pose huge operational, financial and reputational risk.
Strong risk management capabilities help protect the organisation from downside risks and they enable the organisation to look forward and take risks in pursuit of growth, the report added.
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