February 8, 2024
New Survey Says Firms Not as Well Prepared to Handle Risk as They Think
According to a just released survey by an international brokerage and financial services firm, many organizations are unjustifiably confident of their risk management strategy.
Whereas “many organizations are confident about their preparedness,” the report says its findings “reveal that the steps [organizations] are taking to inform their strategies” are not as “robust” as they could be. Most organizations are “leaving gaps … when it comes to financial stability, performance and profitability,” and failing to build “a healthy and productive workforce, and [ensure] a more resilient organization.”
Based on key findings in the report, the following actions are recommended:
- Close the gap between perceived and actual preparedness. Three-fourths of the organizations surveyed claim to be prepared to address the most critical risks such as disruption to business operations, increased economic challenges and unpredictability. However, 76% of organizations lack ample insurance to maintain profitability while nearly 20% of organizations in the U.S. and Canada take property loss prevention measures only if local rules demand it.
- Use insurance as a tool to mitigate financial risk. The opportunity to leverage insurance as a strategic financial tool to manage profitability-related risks remains underutilized as 75% of organizations haven’t explored the idea. Companies should consider using insurance as a strategic financial tool to minimize earnings volatility and strengthen their financial and overall organizational resilience.
- Amplify your focus on employee wellbeing to enhance workforce vitality. The executive survey found 68% of organizations identify employee wellbeing as a top strategy impacting workforce vitality, but only 36% have a strong and consistent focus on it. Companies can significantly improve vitality by using data pertaining to employee population, life stage and other demographic aspects — to design employee wellbeing solutions that are tailored to their workforce.
- Invest in advanced data analytics to meet employees’ needs. When formulating and implementing an organization’s benefits strategy, 53% of U.S. companies use data analytics to improve individual outcomes. However, the companies that claim to be using data analytics may not be collecting or using data to its fullest extent. A robust approach to data analytics encompasses efficient preparation, data acquisition, modeling and deployment, along with a continuous focus on improvement and adaptation.
- Develop an adaptive and effective Enterprise Risk Management (ERM) strategy for resilience. The survey found that 45% of organizations in North America conduct frequent ERM assessments—28% quarterly and 17% monthly. However, only 12% have comprehensive business continuity plans, and 43% note a misalignment between C-suite objectives and risk strategies.
The Survey, conducted by Hub International, polled 900 business leaders across corporate, risk, human resources and education/non-profit functions from companies in 14 sectors in the U.S. and Canada. Survey findings present insights into the risks that companies perceive in the present and future, their level of preparedness and the measures they plan to take to mitigate the identified risks.