C-Level Execs to Meet New Standards of Risk Management
One lesson learned from the recession is the need to focus on risk. In fact a recent study conducted by Accenture reveals the vast majority of corporate executives need to overhaul their approach to risk management. Meanwhile, Fortune recently outlined how the fallout from the financial crisis could breed a new type of corporate leader. Among the qualities of the “new breed” of CEO include the ability to look beyond the short term and to deal effectively with the government. Executive search firm, A.E. Feldman, is on top of the trend. The firm says clients are looking for chief executives who can rise to the new standards of enhanced risk management and face increasing scrutiny while not sacrificing growth.
CEOs Focus on Risk
Accenture’s 2009 Global Risk Management Study, based on a survey of 260 C-level executives with risk-management responsibilities at large companies in 21 countries, found that the vast majority, 85%, of respondents believe they need to overhaul their approach to risk-management if the lessons of the economic crisis are to be used to improve business results. The study’s results also show that 40% of corporate execs polled say their companies have increased or will increase their investments in broader risk-management capabilities in the next six months. Another 31% of respondents say their companies are also considering increasing their future investment in risk management capabilities.
Accenture’s study however pointed to a lack of integration of current risk-management and performance-management processes. Only 27% of the executives polled report that the risk-management function is involved to a great extent in objective-setting and performance management.
“Executives could improve their organizations’ performance and position themselves for economic recovery by linking and balancing risk management and performance management to aid their decision-making and increase shareholder returns,” said Dan London, Managing Director of Accenture’s Finance & Performance Management practice. “Being effective at this also requires companies to integrate their risk management capabilities enterprise-wide.”
C-level executives polled by Accenture also identified benefits associated with enhancing risk management. In fact, 72% of respondents say that their companies’ risk management function has a major impact on their ability to comply with regulations, 61% said the same about its impact on the company’s ability to sustain profitability, and 58% believe that risk management has a major impact on a company’s ability to manage liquidity and cash flow. Moreover, more than half of those polled believe that broader and better integrated risk management capability can boost their ability to achieve competitive advantage, their reputation in the public and with media… as well as their ability to achieve profitable growth.
“Leading companies recognize that an expanded, integrated risk-management program supported by technology that allows management to monitor risk-related factors across a company is not just a protective tool but one that can provide companies with a competitive edge in a constantly changing world,” said London.
Execs to Look beyond the Short Term
Anticipated government regulations will undoubtedly help define the role of the CEO, according to Fortune. The report quotes David Gergen, the political expert and Director of the Center for Public Leadership at Harvard, as saying, The CEO of the future is going to have to be someone who deals well with government.” The report concludes that in today’s economic climate, CEOs cannot fully control their destinies “in a world of competing entities, ranging from regulatory agencies to angry shareholders, from consumers to foreign powers.”
Other qualities expected of the “new breed” of CEO include the ability to look beyond the short term to the horizon and inspire employees amid a prolonged economic slump, says Fortune. The report also contends CEOs of the future will have to be comfortable asking for help and admitting what they don’t understand. Lastly, Chief Execs must have the courage to deviate from the strategic plan when faced with “the unthinkable.”
It is seemingly a new era for the CEO. Fortune quotes Jim Collins, author of Good to Great, as predicting, “It will be a time of spectacular opportunity for the right leaders.”
Are you a CEO? If you want to grow your career or discuss your company’s talent needs, contact A.E. Feldman’s President, Mitch Feldman today.
