@Risk

In what has been heralded as “one of the most comprehensive risk management research studies in the European retail and consumer brands sector since the financial crisis began,” Marsh, the world’s leading insurance broker and risk advisor, found that the recession has significantly increased risk awareness across the industry.

Specifically, senior executives at Europe’s leading retail and consumer brands businesses say that over the next 18 months, they will be concerned with risks associated with cash flow, their supply chains, and trade credit.

Marsh commissioned the survey by Ipsos to identify changing attitudes toward risk management. More than 700 organizations across 12 countries in Europe participated in the study, titled “New risk management insights into retail and consumer brands.” Seven different industries were included; 119 of the companies responding were in the retail and consumer sector.

Here are a few of the key findings from this new research:

• 66% of those polled believe that risk is now more important at board level.

• Two-thirds expressed some degree of concern about their current risk management practices.

• Similarly, two-thirds say that they have reviewed, or are reviewing, their approach to risk. Three in ten anticipate an increase in risk management budgets over the next 18 months.

• 55% cited financial and macroeconomic concerns as a key priority over the next 18 months.

• When asked to rate seven key risks in particular, respondents identified cash flow (75%), supplier risk (68%), and trade credit (66%) as either “very significant” or “fairly significant” near-term priorities.

“Risk management is an on-going process, evolving to counter ever-changing risks,” the executive summary of the report states. “From our survey we can conclude that the retail and consumer brands industry is, on the whole, working to identify its changing areas of vulnerability, and is introducing and developing robust risk management processes and procedures to deal with them.”

In yesterday’s post, “More CFOs Recognizing Supplier Risk as a Priority,” I wrote that it’s encouraging to see that C-level execs are beginning to more fully appreciate the need for comprehensive, enterprise-wide risk management strategies. This new study from Marsh indicates that board rooms in the retail and consumer brands industry are ultimately reaching similar conclusions: that supply chain operations are integral to risk and therefore fundamental to both bottom line performance and cost savings goals.