Varied threats mean holistic risk management needed: FERMA survey

Organisations must integrate a more holistic risk management framework aligned with overall corporate strategy to address both the immediate threats posed by cyber attacks and geopolitical and economic uncertainty, plus the longer-term risks of technology shifts, regulatory developments and climate change, FERMA has claimed following the release of the Global Risk Managers Survey 2024 produced in partnership with PwC. 

The global edition of the survey is based on responses from over 1,000 practitioners in 77 countries and was extended beyond Europe for the first time in 2024 and included members of risk management associations in the US (RIMS), Asia (PARIMA), Australasia (RMIA), Latin America (ALARYS), South Africa (IRMSA) and French-speaking risk managers via Club Francorisk. 

Multiple risk timeframes

The results of the survey show that organisations are having to manage varying threats across different time horizons. The report found that over the next 12 months, the top five risks for companies include cyber attacks, geopolitical uncertainties, uncertain economic growth, talent management and data breach.

Extending the period to three years, the top concerns shift to regulation and the speed of technological change, while the geopolitical environment continues to be a critical area of concern. While at ten years, the study reveals an exclusive risk focus on environmental challenges, with climate change adaptation, carbon neutrality transition, and natural disasters listed as the top three risks for organisations.

“In a climate of polycrisis and interconnected risk, companies must adopt more integrated and unified risk management frameworks to manage such a spectrum of threats across multiple different timeframes,” said Charlotte Hedemark, president, FERMA. “As illustrated by the survey results, the risk manager’s role in this evolving context is becoming more strategic, with practitioners interacting more at board level, as well as having increased responsibilities and greater input into corporate strategy and direction.” 

Increasing strategic involvement

The report reveals the growing prominence of the risk management function at the strategic level, as well as a broadening of the scope of responsibilities undertaken by risk professionals, with 88% of respondents having duties beyond risk management. However, the findings also demonstrate that there is more that needs to be done to establish a clear position for the risk manager within the boardroom.

According to the findings, almost half of risk managers are either a permanent member of, or are invited to and participate in, board and executive committees, compared to approximately one third in the Risk Managers Survey in 2022, showing the increasing importance of the risk management function at the decision-making core of organisations.

Analysis of the expanding focus of risk managers within the corporate strategy reveals evolving priorities, including: 70% of respondents work on strategic risks response, a 9% increase from 2022; 53% analyse sustainability risks and impacts, up from 40% in 2022; and the discovery of opportunities related to strategic risks increased from 28% in 2022 to 47%.

This shift reflects an improving alignment between risk management and corporate strategy, as organisations move towards fully embedded risk-based approaches to adapt business strategies and explore opportunities. Key areas that risk managers are providing input on include disruption risks (50%), geopolitical risks (44%), and scenario testing for business plans (37%).

“Key areas that risk managers are providing input on include disruption risks (50%), geopolitical risks (44%), and scenario testing for business plans (37%).”

Risk management and ESG

Risk managers also have a more prominent role in managing ESG risks, with 57% of respondents involved in assessing ESG-related risks, up 22% on 2022, reflecting the synergy in addressing sustainability and ethical practices alongside traditional risk management activities. As a result, integration between risk management and sustainability / ESG is listed as the main area of investment for both the next one to two years, and the next three to five years, showing the drive to mature in this area. 

There is also a significant rise in respondents’ focus on risk analysis, framework definition and reporting, with practitioners also actively participating in ESG committees. However, the survey reveals that quantifying sustainability risks remains the number one ESG challenge for 58% of respondents, while 49% highlight the limited data available to support ESG analysis/monitoring and therefore quantify risk impact. 

While climate change adaptation is the top long-term risk for organisations, the findings show it is ranked third among risks not considered to be “adequately treated”. As a result, evaluating climate risks and impacts remains a top priority, with 60% of organisations identifying climate change risks in their risk maps, while quantifying the physical climate change risks is a top three activity for risk managers.

“The fact that the focus of respondents is now on ‘adaptation to’ as opposed to ‘mitigation of’ climate risks is an important development,” said Typhaine Beaupérin, CEO, FERMA. “We have seen a similar shift of focus to adaptation by the European Commission, as companies look to transform their operating practices to address the unavoidable impacts of climate change.” 

FERMA Forum Today is in partnership with Captive Review, part of Newton Media.

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