2022 Global Risk Survey: Australian highlights
Embracing risk in the face of disruption
As the world continues to change quickly, and not always for the better, Australian business leaders are grappling with new and emerging risks, and opportunities in navigating the volatile environment. They are still adjusting to ‘COVID-normal’, where business models have been challenged and – in some cases – reinvented. Meanwhile, further uncertainty is coming from interest rate hikes, inflationary pressures, supply chain disruptions and accelerating digital and technology adoption, heightened cyber security and data risks together with climate action expectations and policy directions of a new Federal Government.
What risks are top of mind for Australian business leaders?
Top Australian risks to revenue growth
- Cyber / information management (32%)
- Business operating model (22%)
- Geopolitical risks (19%)
- Talent (19%)
- People (17%)
Cyber risk: A heightened focus in Australia
Cybersecurity was identified as being the top risk for Australian business leaders, who rated it more highly on their ‘risk radars’ than COVID-19 pandemic impacts, economic volatility, or climate change. As digital and technology adoption accelerates, leaders are understandably mindful of how organisational complexity and historical under-investment might expose them to cyber threats.
of Australian business leaders are significantly more concerned about cybersecurity risks
Geopolitical risk and impact on operating
models
Geo-uncertainty continues to rise as a result of a constantly evolving geopolitical environment, challenging existing business operating models and resilience strategies. Leading Australian organisations are investing in scenario analysis and modelling, and leveraging the lessons learnt from COVID-19 to help model plausible outcomes that they may need to respond to.
Talent and people
Australian business leaders identified constraints on resources, lack of required skill sets and high turnover as being amongst the highest concerns relating to managing risks in their organisation. Additionally, Australian leaders are planning to use a combination of recruitment, technology uplift and flexible operating models to win the war for talent.
of organisations indicated that they will focus on increasing headcount in the risk function
of respondents plan to increase their spend on risk technology
of respondents indicated that they would increase their managed services spend in the coming year
Seize the opportunity through strategic risk management capabilities
In an environment where change is constant, a robust risk strategy can allow Australian business leaders to drive value, elevate risk maturity, shift mindsets, increase confidence and enable an appetite aligned approach to risk and opportunity.
The 2022 Global Risk Survey suggests five key actions that organisations should adopt to confidently navigate uncertainty and capitalise on opportunities whilst mitigating against downside events. Our report explores these five areas using observations from the Australian context.
Engage early and get risk insights at the point of decision:
Risk management capabilities provide great value when they are embedded within an organisation’s strategic planning and decision making processes. They should be agile and operate in an iterative and coherent manner to reflect the organisation’s changing risk profile.
Australian business leaders should use the lessons learnt from the COVID response to drive end-to-end risk management and improve decision-making through information sharing and collaboration.
Take a panoramic view of risk:
Companies are investing in obtaining greater risk-related insights, with three-quarters of executives planning on increasing spend across data analytics, process automation and risk management technology to support the detection and monitoring of risks.
For Australian business leaders, it’s important to understand the spectrum of risk exposures, inter-related risks and recognise differences in approach for managing strategic risks versus operational/ financial risks.
Set and employ risk appetite to take advantage of the upside of risk:
An organisation’s risk management capabilities can create tremendous value if they help the organisation take advantage of the upside of risks that have higher return, within acceptable guardrails.
Designing a more dynamic risk management capability where upside can be realised, while keeping risk to acceptable levels or managing them when they occur, is key for Australian organisations.
Enable risk-based decision-making through systems and processes:
Driving consistency in risk management capabilities across the organisation can be difficult. Investment in risk processes, frameworks and enabling systems is needed to help an organisation deploy a standardised and consistent approach to risk management
For Australian organisations, end-to-end risk processes should be mapped to identify pain points to drive streamlining of process flows and automation.
Double down efforts on top risks:
Risk management capabilities should go beyond traditional risk analysis, and perform deep dives on fast-moving, high-priority risks. This analysis should identify risk triggers and signals and help risk owners understand the interdependencies between the risks which matter the most in the organisation
Australian organisations are recognising they need greater skills and expertise for complex risks, such as third party risks, privacy, data, financial crime, strategic/ modelling, cyber and ESG.
About the survey
The 2022 Global Risk Survey is a survey of 3,584 business and risk, audit and compliance executives conducted from February 4 to March 31, 2022. Business executives make up 49% of the sample, and the rest is split among executives in Audit (16%), Risk management (24%), and Compliance (11%).
Fifty-eight percent of respondents are executives in large companies ($1 billion and above in revenues); 19% are in companies with $10 billion or more in revenues.
Respondents operate in a range of industries: Financial services (23%), Industrial manufacturing (22%), Retail and consumer markets (16%), Energy, utilities, and resources (15%), Tech, media, telecom (13%), Health (9%), and Government and public services (2%).
Respondents are based in various regions: Western Europe (30%), North America (29%), Asia Pacific (21%), Latin America (12%), Central and Eastern Europe (3%), Middle East (3%), and Africa (3%).
PwC Research, PwC’s global Centre of Excellence for market research and insight, conducted this survey.
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