Deloitte survey: Social media now seen as high risk
- Lebanon: Monday, September 03 - 2012 at 15:19
- PRESS RELEASE
A new survey from Deloitte and Forbes Insights, entitled Aftershock: Adjusting to the New World of Risk Management, reveals that fewer than 25% of United States executives, including many working at multinational companies, report that their global organizations continuously monitor risk.
More than one-third (41%) of respondents said that they saw the global economic environment as the most important source of risk over the next three years, and nearly one-third put government spending and budget into that category. The top areas of concern regarding increased volatility over the next three years included financial risk (66% of respondents), followed by strategic risk (63%) and operational risk (58%).
"Social media wasn't even on the radar a few years ago—now it's ranked among the top five sources of risk—the same level as financial risk," said Fadi Sidani, partner in charge, Enterprise Risk Services, Deloitte Middle East. "The rise of social media is just another contributor to the volatile global risk environment that companies are being forced to navigate. The current marketplace seems to require that global organizations be nimble in their risk assessment approach, whether it's dealing with what employees post on social networks, or how they're coping with global regulatory changes or taking advantage of the opportunities that rewarded risks can create."
In the Middle East alone, more than 86% of active web users use social media to get news, information and advice on various issues (Arab Media Outlook / Deloitte report). In addition, 70% of users have indicated that they use social media to voice their opinions, according to the report. As such, social media has become a top concern for executives across the Middle East.
In addition, according to the Deloitte/Forbes Insights Survey, more than 50% of executives believe that regulatory, technological, and geopolitical risk will increase in volatility, and 55% of executives surveyed reported that their organizations will revamp their risk approach within the next 12 months. Roughly nine in 10 executives (91%) reported that they plan to reorganize their approach to risk management in some form over the next three years.
When asked how they planned to accomplish this, the majority of executives (52%) said that they would elevate the profile of risk management throughout their organizations. Other areas viewed as key included reorganizing risk management processes (39%), additional training for staff (37%), incorporating new technology (31%), and integrating risk into strategic planning (28%).
Despite advances in risk-related technologies as well as concern about unstable risks, the survey found that automation tools as well as tools used for continuously monitoring risk are underutilized. Most monitoring is done periodically, on a monthly, quarterly, biannual, or annual basis.
"Based on the findings of this survey and our interactions with clients, we believe technology has the potential to play a breakout role in the management of risk, but many companies are still behind the curve in this area," said Tariq Ajmal, partner in charge of Technology Services at Deloitte in the Middle East. "It is encouraging, however, that more than half of the respondents said their companies were planning to invest in continuous risk monitoring, and the tools that are available should not only help them with risk management overall, but also increase efficiency and decrease costs over time."
The companies that participated in the survey were from multiple sectors, including life sciences and healthcare, consumer and industrial, and technology, media and telecom. When it comes to risk management, there is no "one-size-fits-all" model. Survey respondents disclosed varying perceptions of risk as well as diverse beliefs with regard to the allocation of resources and organization of the ERM processes.
Additional survey findings:
• Risk viewed as C-suite issue. Risk management has become a C-suite issue. Of those surveyed, 26% said that the main responsibility for overall risk management belongs to the chief executive officer, with 23% assigning this responsibility to the chief financial officer or treasurer. Interestingly, the chief risk officer or head of risk came in third place, with 19%.
• Automated risk management systems and processes. Dashboard reporting for senior stakeholders, data analysis, and self-assessment are most often a mix of manual and automated processes. 28% of respondents said that their companies were in the process of automating their risk reporting.
• Budgeting for risk expected to remain stable. Respondents indicated that strategic risk and technology risk were the two areas where budgets will increase the most. Approximately 50% of respondents said that they expect minimal change to risk management budgets across the board. Fewer than 15% of respondents across all risk areas said risk budgets would decrease over the next three years.
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