Marie-Gemma Dequae (ed.) with HBR Analytics Services for FERMA, Zurich and PRIMO | 2013

THE C-SUITE IS taking a stronger role in leading the risk management effort at major primarily European companies, underscoring the higher priority risk has assumed in the wake of several years of financial and economic turmoil. Congruently, companies are underscoring the need for strong board involvement to facilitate decision-making regarding strategic and enterprise-wide risks and to encourage acceptance of a culture of risk management further down in the organization. Companies are struggling, however, to create a wider role for the risk function as a participant in strategic planning and transformational initiatives. And European executives express concern about the robustness of their risk management processes and channels of communication.

Vast changes in how business is done, sparked by the technology revolution and globalization, are meanwhile raising concerns about company and brand risk. These and other challenges are prompting companies to devote more resources to defining their risk appetite and to tracking, measuring, and analyzing risk through such tools as “heat maps,” key risk indicator scorecards, scenario analysis, and loss forecasting. The challenge, however, some executives said, is still to make sure that risk is “owned” at appropriate levels of the organization and that risks are communicated efficiently, such that top management and the board can make timely, fact-based decisions about how to address them.