Many organisations are looking to increase investment in artificial intelligence (AI), machine learning, automation, cybersecurity, and cloud solutions, according to a new report from PwC. However, many companies are still in the early stages of developing those processes and, in turn, lack the data to build comprehensive risk profiles .
PwC’s Global Risk Survey 2023 found that nearly 40% of CEOs surveyed think their company will not be economically viable a decade from now if it continues on its current path. Organisations must change and reframe the way they see risk to build resilience and unlock opportunity, the report said.
“The ability to adapt, change, and reinvent at pace amid this constant change and uncertainty is vital for survival and sustainable growth,” the report said. “Harnessing the power of technology and data in new ways, combined with building more diverse multi-disciplinary capabilities across the organisation, will be critical to turning risk into that enabler of change and growth.”
PwC surveyed 3,910 business and risk leaders across tech, operations, and finance.
“Those in faster moving sectors, such as retail and tech, are more likely to embrace risk and seek opportunity, while those in regulatory-driven sectors such as government and pharmaceuticals are more likely to prioritise compliance and focus on risk avoidance,” the report said.
The report found that fast movers (which the report refers to as “risk pioneers”) are more likely than other organisations to be upskilling internal teams and making greater use of data to navigate risk.
How ‘risk pioneers’ are navigating challenges
Respondents cite poor data integration and management (41%), high maintenance costs (39%), increased risk of operational failure (37%), and increased security vulnerabilities (36%) as the biggest tech challenges for risk management in their organisations, according to the report.
Consequently, only 24% of respondents say they have established technology and data procedures for risk management, but they are not fully optimised, the report said.
The report lists five things for organisations to consider in an era of emerging technologies, risks, and opportunities:
Action is needed for innovation. Despite challenges, risk pioneers are demonstrating that the opportunity for an early advantage is still available to those bold enough to move quickly, and embrace emerging technology at speed, the report said.
Put purpose at the centre of operational strategy. “Working with your employees and wider stakeholders, such as investors, regulators, and non-executive directors, to set a clear and authentic purpose builds the right risk mindset,” the report said, “which then feeds into the risk frameworks and metrics that will help build resilience and deliver sustainable outcomes.”
Fostering greater collaboration with leadership. Just over a fifth of risk executives say their own risk appetite matches that of their CEO and board, the report said. Fixing the disconnect between the risk function, leadership and the wider business, and having more strategic conversations earlier in the process, are key if organisations are to find opportunities where competitors may still see risk.
Invest for resilience. Better performing organisations are more likely to have invested across more resilience initiatives in the last 12 months, the report said. “But there is room for improvement in initiatives such as establishing a cross-functional resilience team, expanding [a] network of key suppliers as part of business continuity plans and building back-up production facilities.”
Create a culture where experimentation can thrive. “Another key growth mindset behaviour evident in top performing organisations is detoxifying failure through a ‘safe to fail’ culture,” the report said, “where employees feel they can experiment and adapt to different circumstances and events.”
— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.
