The Risk Institute at The Ohio State University Releases its Second Annual Survey on Integrated Risk Management

Risk Institute Portraits Fisher Hall - Third Floor Feb-02-2016 Photo by Jay LaPrete ©2016 Jay LaPreteIsil Erel
Academic Director, The Risk Institute
Professor of Finance
The Ohio State University Fisher College of BusinessRisk Institute Portraits Fisher Hall - Third Floor Feb-02-2016 Photo by Jay LaPrete ©2016 Jay LaPrete

 

Philip S. Renaud II, MS, CPCU
Executive Director, The Risk Institute
The Ohio State University Fisher College of Business


On June 1, 2016, The Risk Institute at The Ohio State University Fisher School of Business unveiled findings from its second Annual Survey on Integrated Risk Management. The research initiative focuses on how U.S. companies view the role of risk management, how it is structured and the ways it is integrated to support business decisions. Senior leadership from more than 530 financial (23 percent) and non-financial (77 percent) companies both public and private were surveyed for the report.

This year’s survey has demonstrated that risk management continues to evolve and firms are creating holistic and organization wide risk management functions. The survey highlights how integrating risk management plays a key role in a firm’s ability to remain competitive and create sustainable value in the current business and economic climate.  

Respondents of the survey deliver insights across five key areas:

  • Organizational structure and tone at the top
    • Firms are moving toward a more centralized approach to risk management, as it is a source of both growth and value. In fact, half of the firms surveyed shared that senior leadership is allocating more funds for external and internal resources.
  • How risk management is integrated into business processes
    • To effectively integrate risk management into business decisions, firms must recognize business processes. The three leading processes reported by survey participants were:
      • Compliance
      • Strategic Planning
      • Operational Business Planning and Management
  • The scope of risk management
    • The survey highlighted that to limit risk taking by employees in financial and non-financial firms, management extensively takes steps to limit sales at risk (or similarly cash flow at risk). They also require use of financial instruments (e.g. derivatives) as hedges rather than speculative tools, set size limits on projects permissible without limits, and use financial hurdle rates to adjust for risk.
  • Risk management process
    • While many respondents believe risk management is integrated across the firm, they also report that only a subset of business functions are actively involved in identifying, measuring and managing major risks.
  • Disruption
    • Approximately 80 percent of firms participating did not experience a disruptive event in the last year. If they did, most reported that the disruptions were related to regulations, cyber theft of confidential information and or systems failure.

The Risk Institute is excited to continue to participate in the conversation around the evolution of risk management within business, from an integrated perspective of academia and practice. Stay tuned as we dig deeper into the survey results in future posts, and feel free to contact us to continue the conversation or explore ways to engage with us on this mission.


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