New research, conducted by Marsh, has found that senior executives in Europe’s leading organizations are most concerned about customer-related risks and access to credit, as they plan their recovery from the global economic downturn.
Marsh said the nearly two-thirds of those who responded to its survey (62 percent) from seven top industry sectors across Europe “identified financial and macroeconomic risks as their top concern, with credit risk being chief among them. Overall, credit risk was identified by 31 percent as being the number one priority among financial risks.
“Asked how concerned they are about the level of risk associated with four groups – customers, suppliers, insurers or outsourcing partners – a majority in every country, and 58 percent overall, selected customers as a significant source of concern.”
Mark Pollard, Head of Marsh’s Industry Practices for Europe, the Middle East and Africa, (EMEA) commented: “This research was carried out as companies began to consider the long-term implications of the financial crisis. Given the priority attached to credit risk and the recession-driven reduction in demand, it is hardly surprising that these remain the source of most concern in organizations across Europe. Although the region is emerging from recession, many risk issues remain. Our experience in past recessions is that many organizations can falter, having endured the worst. ”
Marsh’s research found that, in response to the downturn, over two-thirds (69 percent) of organizations surveyed have reviewed their approach to risk. Almost three-quarters (73 percent) of participants agreed that risk management is now more important at the most senior levels of their organizations. Marsh’s findings also suggest that risk management has largely escape budget cuts; only 5 percent of those surveyed expected risk management budgets to fall while 34 percent expected them to rise.
Pollard added: “While it is heartening that one-third of organizations see their risk management budgets increasing, more organizations need to follow this lead to help cement long-term success, post-recession. Good risk management is a key competitive differentiator, indispensable for an organisation to flourish and in some cases just to survive.
“Prudent business leaders can free up much-needed working capital from their balance sheets through having a better understanding of the risks facing their organizations, how much these risks cost and what steps can be taken to mitigate them.”
Marsh’ said its report – The emerging future of European risk management – “is one of the most comprehensive risk management research studies since the financial crisis began. Senior risk and insurance professionals in 700 leading firms from key sectors across Europe were interviewed to examine their attitudes towards risk management in the current economic downturn.”
The survey involved 705 participants across seven industry sectors. These participants all contribute to strategic decision making related to their organization’s management of risk. The survey was conducted in Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, the Netherlands, Norway, Spain, Sweden and the United Kingdom. The organizations surveyed all have a turnover greater than €50 million [$75 million].
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