2011-11-03

By staff reporter

A new report released today by The Economist Intelligence Unit reveals the importance of looking beyond the current risk horizon and how executives can equip their organisations to deal with future risks and deliver long-term performance.

The report, Getting New Perspective on Strategic Risk, which surveyed 500 global business executives, highlights the dangers of allowing current challenges, from the ongoing eurozone crisis to the prospect of a double-dip recession, to take priority over long-term planning.

Though many business leaders will naturally focus their attention on the immediate future and ensure their short-term financing needs are met, the report warns that, by prioritising short-term profits over long-term performance, businesses reduce their chances of sustainable success.

Some key findings of the research include:

•Long-term risk management is rising on the agenda for many business leaders: Over the past year, 50% of companies say that they have made their risk management more forward looking and agree they should spend more time thinking about the risks they will face 10 years from now..

•Links between risk management and strategy are strengthening in many organisations: More than half of respondents say their risk function plays a formal role in strategy-setting and evaluating new market investments.

•Many companies are using scenario planning, but few embed it into the overall strategy process: Only 20% of respondents say that scenario planning plays a vital role in helping their company to formulate and adapt strategy in uncertain times.

“Establishing long term risk management at the heart of strategic planning is essential to the future success of any commercial organisation, “ said Willis Group president Grahame Millwater at an event held today to launch the report. "The findings of this latest global risk survey by the Economist Intelligence Unit reveal that although we must address the challenges facing us here and now, we must also reflect upon how we are preparing our companies to face longer-term risks in order to protect our future and ensure the sustainable growth and value of our businesses.”

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