Risk as a boardroom issue

Combining sustained growth with high return on capital is increasingly difficult to achieve. Most CEOs charged with that delivery are operating in a marketplace shaped by external factors including increased customer expectation, the scarcity of talent, stringent regulation and increased competitive pressure - all bearing down on the capacity of an enterprise to respond to market opportunities.

To stay on course, CEOs are increasingly turning to new and innovative ways of doing business. The trends of outsourcing, offshoring, partnering and reaching into new territories are being adopted at a heady pace.

The end result may be improved short term earnings, but it also creates a new business model that significantly impacts on the CEO's ability to maintain strategic control of the business. Increased organisational complexity which makes it difficult to ascertain where the internal risks in your organisation lie, combined with the threat from control stealers (external factors that directly or inadvertently take control away from management) may be unintended consequences of these modern business trends.

According to recent PricewaterhouseCoopers research, it is these unintended consequences that constitute the principal challenges for businesses today.

This means that “risk management” requires a fundamental rethink – simple tactical risk measures are no longer adequate. What is required is a more expansive, strategic vision and longer term integrated approach, one that embraces control over customers, value drivers, operations, people and the control stealers. Only this way can CEOs confidently keep pace with change and deliver growth that is truly sustainable.