Accenture has conducted a bi-annual global risk management study since 2009, allowing us to take a look at how the function has changed over time—and where the function is headed.
Comparing then to now, we find a function that has completely redesigned itself in response to changing market, regulatory and customer demands.
A function that used to be primarily reactive and independent, typically a step removed from the day-to-day activity and decision making—is now much more proactive in nature and increasingly connected and influencing important decisions by the institution. The function is called upon to help more actively anticipate a broad agenda of risks that go well beyond the credit, market and operational concerns that held sway 10 years ago.
To put it succinctly, risk management has broadened its horizons, and will keep doing so for the foreseeable future. Here is a sampling of what we found in the 2015 Global Risk Management Study:
- Among financial services executives, 92 percent consider risk when they are forecasting and budgeting; 87 percent consider risk in M&A and financing discussions; and 84 percent consider risk during strategic planning.
- Among banking respondents, almost 60 percent are pushing past regulatory compliance to focus additionally on strategic, longer term change initiatives.
- Nearly nine of every 10 capital markets risk leaders (85 percent) see the risk function as a critical enabler of long-term growth.
- The same percentage of insurance risk leaders believe the risk function can tap into digital and leverage new strengths to become a key business partner.
Each of these points illustrate a risk function with a wider scope, a more complex vision and a more elevated seat at the table.
Perhaps the most fundamental shift we see—the one that is propelling the risk function into the C-suite—is its focus on opportunity. In 2009, the risk function was rather myopic, honing in on risk and regulatory concerns but relatively untroubled about other business needs. Further, the function was in “protective” mode, working primarily to keep the business safe from the industry’s traditionally defined and understood credit, market and financial risks.
The risk function still is called upon to protect the business today. But now, thanks to the changing nature of risk, it can also help the business assess and pursue opportunities for growth. As digital technologies and social media tools become “the way of doing business” in financial services, risk leaders are uniquely equipped to identify and evaluate the inherent risks in these technologies—and then devise strategic approaches for managing those risks so the business can feel safe pursuing new digital and social media channels.
In a single decade, the risk function has transformed from a narrowly defined, tactical, left-brain role into a comprehensively focused, strategic, left- and right-brain profession that can guide a business toward opportunity and growth. The next decade promises an even more valuable risk function.
See the highlights of our Risk Management study, or read the specific reports for Banking, Capital Markets or Insurance, to read more about risk managers’ transformation from operational function to strategic business partner.