While many companies have taken financial hits because of unforeseen events, a significant number of executives don’t have a complete understanding of their company’s exposure to risk and are unable to identify their risk management strategies, according to a study conducted by Forbes magazine and sponsored by Zurich.

According to the 414 U.S. executive respondents — representing banking and financial services, construction, health care and real estate — unseen risks in the following areas have caused companies financial damages:

• Operational risk – 28 percent

• Regulatory/compliance risk – 27 percent

• Financial risk – 26 percent

When asked to identify the barriers to risk management, the biggest number of banking and financial executives (36 percent) said it was lack of understanding how best to mitigate risk; 25 percent blamed a lack of understanding of the sources of risk; and 25 percent cited their company’s insufficient risk management budget.

Also, according to the banking/financial industry respondents, the top five risks most deserving of personal attention — in order of importance are regulatory/compliance risk, strategic risk, financial risk, operational risk and technology risk

Given the swath of financial damage caused by unanticipated events, surprisingly 45 percent of all respondents still said they would manage risk no differently over the next three years – about twice the percentage of those who said they would make changes — and 32 percent didn’t know whether they would do things differently or not.

Among the remaining respondents who said they would do things differently, close to 40 percent said they would make some or all of the same four changes:

• View risk as interconnected

• Align risk management more closely to growth strategy

• Cover more risks

• Revamp the in-house risk management team

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access