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Digital EditionOrigami Risk Report Reveals Disconnect in Risk Preparedness
There’s a disconnect between how prepared organizations say they are to handle a variety of risks and the concrete actions they are taking to prioritize and advance risk management, according to a new survey from Origami Risk.
The 2023 State of Risk Report, based on survey responses from 240 risk professionals, finds that while most organizations express optimism about their risk readiness, their actions tell a different story.
When asked directly, respondents gave their organizations high marks for risk preparedness. However, Origami Risk’s report shows that key measures of risk management activity have declined over the past year.
Origami Risk designed the report to not only highlight key trends and analysis, but also translate those findings into actionable recommendations for organizations to shore up their risk management practices.
Organizations Express Confidence in Risk Preparedness
When asked directly about their risk preparedness, organizations expressed a high level of confidence. Among risk professionals, 82% feel moderately prepared or higher for an unexpected crisis, with a high degree of certainty. Looking ahead, 70% have an above average or excellent six-month outlook, with only one response indicating a “poor” outlook.
Despite the optimistic assessments given by most respondents, actions taken by the respondents to manage risks tell a different story.
For example, asked to rank the priority their organizations place on risk management using a 10-point scale, the figure dropped nearly a full point to 6.69 on average in 2023 from 7.5 in 2022.
Also, the percent of respondents who had “fully connected” risks with strategic objectives of their organization had dropped by nearly one third.
Nearly half, 46%, of respondents made no risk technology purchases in 2023, double the figure not spending on technology from last year. The percent of risk professionals with no plans to further integrate their risk data/systems across RMIS, EHS, ERM, and Compliance increased 10% over last year.
Another telling indicator, the report found, was that 52% of respondents made no changes to update their supply chain, nearly doubling from last year’s figure. This was in spite of a growing risk of disruptions in global supply chains caused by geo-political conflict, the report noted.
“This could indicate that overconfidence and complacency are creeping back in at a time when the risk environment is demanding agility and foresight,” according to the report. The latest trends reveal many organizations are retreating from risk management best practices, leaving them underprepared for the next disruption. Course correcting to prioritize risk management will be critical for navigating today’s uncertain risk landscape.
Navigating the Dynamic Risk Landscape
The Origami Risk report offers several key recommendations.
First, companies must find the right balance between standing still and running wild when it comes to risk. As the report stated, “In a highly dynamic risk environment, standing still means getting run over or passed by, but running wild means recklessly absorbing risk — establishing balance is key.” Leaders need to be proactive in identifying and managing risks, but do so in a measured, strategic way, according to Origami Risk.
Even as novel and emerging risks arise, proven risk management approaches can still be applied. “Even the most novel emerging risks have familiar elements — leverage what already works to help manage those components,” the report advised. By breaking down risks into their constituent parts, tried-and-true mitigation strategies can address certain aspects.
Risk management professionals themselves must transform to provide the leadership that organizations now require. “Yesterday’s risk professionals weren’t designed for this environment — there are tangible steps you can take to redefine the modern risk professional,” according to the report. This may involve upskilling in areas like data analytics, enhancing communication abilities, and cultivating a strategic mindset.
Finally, the report emphasizes that true risk preparedness demands concrete action, not just a feeling of readiness. “Feeling prepared requires nothing, but being prepared requires action.” Companies must rigorously assess their risk exposure, develop robust contingency plans, and regularly stress test their resilience. Only by taking these steps can organizations hope to successfully steer through today’s perilous risk environment.
Access the full report here. &
