Eversheds Sutherland Launches Global Review of Risk in the Boardroom - What Boards Are Doing to Identify and Address Risk
In the Boardroom: Risk Governance Review
LONDON, May 22, 2019 /PRNewswire/ -- Global legal practice Eversheds Sutherland, in association with forecasting analysts Oxford Economics, today announces the launch of its latest board report, with a focus on current threats and mitigation trends in risk governance, where boards see their current and future risks, and how they are structuring their governance procedures to oversee them.
Corporate board directors are working harder than ever before: new regulations, changing business models, new entrants disrupting markets and cyber risk as well as other emerging risks require rapid responses. At the same time, technological innovation offers many companies a chance at digital transformation, adding urgency to the board's strategic mandate.
Eversheds Sutherland's Risk Governance Review went into the boardroom to ask approximately 400 board-level directors - What risks were top of mind for them? How do successful boards stay on top of these risks while remaining agile? And what can all boards do to adopt best-in-class governance practices?
Aleen Gulvanessian, Head of Boards and Governance, Eversheds Sutherland comments:
"In this new age of corporate risk, our findings are that boards are looking at risk harder than ever, with many directors telling us that all board decisions are reviewed through the lens of risk. Well performing boards do not approach risk as a 'tick box exercise' and the most effective boards, when looking at strategy, are indirectly thinking about risk. Cyber risk has climbed to the top of most companies' worst fears but, despite the risks of climate change and artificial intelligence being very high on the news agenda, they remain low on board agendas.
"We found that, whilst there is no single or infallible way to oversee risk, those who believe they have a visionary CEO were particularly comfortable with the lens through which the board addresses risk, for example when a company is reinventing its business model before the competition gets there first."
Ian Gray, Executive Partner, Clients, Eversheds Sutherland comments:
"Against a backdrop of an ever more uncertain global geopolitical climate, boards are adapting their practises to consider risk in a far more strategic way. The agenda keeps changing with new, difficult risks such as digital disruption and automation, and climate change issues."
Visit the Risk Governance Review page on the Eversheds Sutherland website for more details.
Key findings of the report show that the top 10 global risks are:
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The report also highlighted that the most boards add value on risk by concentrating on top risks in real time, with the majority of respondents (57%) reporting that they have the role of Chief Risk Officer in place, an increase from 2014 when just 28%[1] of companies reported having a CRO. In summary, it is clear that over the past five years, the once-rare CRO role has become far more commonplace. On a sector basis, our report found that financial services companies (where the position of CRO is mandated by regulation) naturally led the pack with the appointment of a CRO at 87%, with Industrial Manufacturing, at only 22%, having the lowest number of CROs on their board.
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Methodology:
Eversheds Sutherland's In the Boardroom: Risk Governance Review, commissioned from Oxford Economics, sought to gain a deeper understanding of their approach to risk and how their companies structure their operations and governance to mitigate risk.
In late 2018, Oxford Economics surveyed 350 board directors at for-profit companies, of which 30 served on the boards of privately held firms. In total 46% of respondents came from Europe; 29% from the US; 13% from Asia; 9% from the Middle East; and 3% from Latin America. Industry groups represented include: telecommunications, financial services, pharmaceuticals, food/consumer products, retail, entertainment, transportation, industrial manufacturing, engineering and construction, chemicals, automotive, utilities, hospitality, energy and mining, professional services, aerospace, technology, healthcare, agribusiness, and industrial products. All companies had annual revenues above USD 250 million, with 58% having revenues above USD 1 billion.
Additionally, Eversheds Sutherland conducted 50 anonymous interviews with clients; quotes from those interviews are identified by the individual's position and industry sector or location.
About Eversheds Sutherland:
As a global top 40 law practice, Eversheds Sutherland provides legal services to a global client base ranging from small and mid-sized businesses to the largest multinationals, acting for 72 of the Fortune 100, 61 of the FTSE 100 and 120 of the Fortune 200.
With more than 3,000 lawyers, Eversheds Sutherland operates in 67 offices in 34 jurisdictions across Africa, Asia, Europe, the Middle East and the United States. In addition, a network of more than 200 related law firms, including formalized alliances in Latin America, Asia Pacific and Africa, provide support around the globe.
www.eversheds-sutherland.com
[1] Aon Global Risk Management Survey 2015: https://servizi-it.aongate.it/Documents/2015-Global-Risk-Management-Report-230415.pdf
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