by Michael Zielenziger
These are turbulent times, and businesses around the globe need to not only manage through unplanned disruptions, but also learn how to rapidly adjust to the new business models and rapidly evolving consumer demand that can accelerate future growth.
To do this, companies must pursue two parallel strategies: building agile and flexible risk management frameworks, while also building the resiliency that will make those frameworks useful. Risk agility refers to a company’s ability to alter and adapt risk management to respond quickly to events; while risk resilience refers to a company’s ability to withstand business disruption.
Companies must combine risk agility and risk resiliency to achieve sustainable growth
How best to balance those two imperatives is the focus of this year’s 5th annual Risk in Review report published by PwC with the assistance of Oxford Economics.
The headlines? We found that risk-agile companies are far more likely to expect significant gains in revenue and growth than those that are less agile. But some companies may be emphasizing their agility at the expense of longer-term viability. However, companies that are bothrisk-agile and risk-resilient—those that have built in strong risk management cultures and tools—can act more confidently when crisis comes. They sacrifice little in growth to build the resiliency necessary to survive the long term.
The bottom line: even though risk agility boosts growth, balancing it with risk resilience can give companies a significant competitive edge over the longer term. Developing the tools for risk resilience need not impede a company’s agility or its capacity to grow.
The study developed a matrix by industry that compares agility and resilience scores, and finds, for example, that healthcare providers and asset managers are the best at combining agility and resilience—a finding that well reflects the volatility coursing through the US healthcare industry and financial markets in recent years. By contrast, the education and government sectors are the least agile and least resilient.
For more in-depth analysis and findings, read the full report, Risk in Review: Going the Distance, here.
Michael Zielenziger is a Managing Editor of Thought Leadership and helps a range of global clients develop new insights and identify opportunities around economic and technological change. He has worked on a range of topics including the impacts of globalization, workforce issues, the interactions of media and technology, the changing US healthcare environment, and the prospects for emerging markets, with a special focus on Asia.