The failure by senior managers to understand how risk management enhances corporate decision-making means many organizations based in Mena are not fully capitalizing on growth opportunities, a report said.
Although almost half (47 per cent) of senior business leaders believed their organizational decision-making to be informed by a formalized risk management framework, only 9 per cent of the risk teams questioned shared this view, added the inaugural 2019 Mena Risk Management and Insurance Perception Survey from Marsh, a leading global insurance broker and risk adviser.
According to Marsh’s survey, this difference in opinion underlines how businesses that simply utilize risk management solely to meet regulatory or contractual obligations are failing to understand and embrace risk as a driver of growth. In order to achieve long-term sustainable corporate growth, enterprise risk management can support strategic planning by identifying risk factors that could make a business vulnerable to interruptions or obstacles.
Other findings of the survey include:
• 14 per cent of business leaders admitted using a scattergun approach to risk management across their organizations; 9 per cent stated that their organization has no formal risk management strategy.
• Despite a third of organizations not having the necessary elements in place for a strategic approach to their risk management, over 83 per cent of risk managers believe they are providing their board with relevant risk information.
• 57 per cent of business leaders believed there was a focus on opportunity risk while only 36 per cent of risk teams felt similarly.
The top three reasons for insurance purchasing were minimizing the impact of threats and peace of mind; for contractual reasons; and to meet regulatory requirements. Using insurance to minimize threats suggests that there is a higher value being placed on insurance purchasing however organizations still view insurance purchasing as an obligation rather a tool to mitigate risk.
Marsh MEA CEO Christos Adamantiadis said: “Organizations across Mena are operating in a period of heightened risk and uncertainty. It is critical for every organization to review their risk transfer and risk management options.
“Previously regarded as a company safety net, risk management is now enhanced by powerful data and analytics tools and is quickly emerging as a strategic business area in the Mena region. By adopting a more strategic approach to enterprise risk management and insurance decision-making, organizations can capitalize on opportunities to build resilience and create lasting and sustainable growth.”
The Marsh 2019 Mena Risk Management and Insurance Perception Survey provides an analysis of the role risk management plays in influencing an organization’s business functions, corporate structure, and decision making process in Mena by studying the responses of insurance purchasing decision makers from across the region, including risk managers, C-suite executives, and senior finance, legal/compliance and IT practitioners. – TradeArabia News Service