More strategic, important — and creative: Governance Institute releases major study into future of the risk management profession
With the pandemic delivering a sharp lesson in risk in 2020, shining a strong spotlight on the risk management profession, Governance Institute of Australia has taken a microscope to the sector to uncover the key challenges likely to hit next — and outline how the profession can best prepare for more rapid change.
The Future of the risk management professional report is based on a survey of almost 350 professionals, an expert roundtable discussion, and in-depth interviews with three leading risk management experts.
The report found that while 77% of respondents expect the risk management function to become more important in the next five years, nearly half (47%) reported that their risk management team does not have the resources needed to do its job effectively.
Business continuity and resilience, regulatory change and compliance, and cybersecurity are expected to be the three key drivers of change in 2025, the study found.
But by 2030, climate change, artificial intelligence and business continuity and resilience are expected to dominate.
Released today, the report also examines the key career attributes that will be required. The report sponsored by PKF, Dataminr and Holding Redlich follows the release of Governance Institute’s annual Risk management survey earlier this year and Future of the governance professional last year.
Key findings from the survey:
- 77% say the risk management function will grow in importance in the next five years
- 91% said that COVID-19 had affected their risk management function and its place within their organisation, with 52% reporting it has had a significant impact
- 72% said their organisation has a dedicated risk management function
- 47% said their risk management team does not have the resources it needs to do its job effectively
- One in five organisations has a risk specialist in the boardroom. However, 52% say that risk is represented in the C-suite by someone with shared responsibilities
- Drivers of change: Cybersecurity to have the biggest impact on risk management in 2025 (41%) as well as regulatory change and compliance (40%). Then climate change (38%) and artificial intelligence (37%) will be driving changes to risk management in 2030.
- A diverse skill set will be required with 81% reporting creative, out of the box thinking will be required to be effective, as well as communications and stakeholder engagement skills (80%) then data analytics skills (70%).
- 31% feel they are well or very well prepared for the future and 17% feel they are not prepared. 52% of respondents feel slightly prepared.
A roadmap for the risk management profession
Governance Institute of Australia CEO Megan Motto said the report provides a roadmap for the risk management profession as it traverses an uncertain, fluid future landscape.
“This year, the risk management profession has been challenged like never before with a series of crises striking and the voice of risk raised to the boardroom table as organisations grapple with major decisions,” Ms Motto said.
Ms Motto said the pandemic served to speed up the rate of change already evident in the profession – and more change is on the horizon.
“This is a valuable snapshot of the skills and attributes that will be in demand in order to tackle future risk management challenges. It will help guide the profession so they can be better prepared to meet the challenges.”
Risk lessons for managers and boards
With almost a third of survey respondents reporting that their risk management functions are not very well resourced, Ms Motto said a key lesson from 2020 is for organisations to place a focus on strengthening their risk management function.
“The report contains some important reminders for management and boards about ensuring their risk function is prioritised and well resourced. Recent corporate crises have illustrated just how dramatically companies can unravel when this is not the case.”
More about The Future of the Risk Management Professional survey
- Respondents: senior risk management or governance professional (33%), CEO or C-Suite executive (19%), early career risk management or governance professional (15%), risk management or governance consultant (14%), non-executive director (13%) and retired (6%).
- Sectors: Not-for-profit (31%), government/ public sector (24%), unlisted (19%), listed/ Australian public company (17%), non-government organisation (9%).
About Governance Institute of Australia
- A national membership association, advocating for a community of 43,000 governance and risk management professionals from the listed, unlisted and not-for profit sectors.
- Our mission is to drive better governance in all organisations, which will in turn create a stronger, better society.
From the sponsors of this report:
- PKF: A key role of the risk profession is to find the balance between what you know is relevant and what your audience is interested in. This influencing role has become more acute given the disruption of the last 12 months and the uncertainty that lies ahead. This latest survey from the Governance Institute provides timely and thought-provoking reading for all governance professionals whether they be executives, company secretaries, risk professionals or boards.