An ongoing shift in the ownership of risk management activities
It’s almost been a decade since the 2008 global financial crisis and its aftermath forced companies into a defensive risk management posture, pulling responsibilities back from the business to the second line of defense as they fought to weather the storm. Faced with the new challenges of today’s complex risk environment however, the tide is shifting once again.
2017 PwC Risk in review survey.
Today, a collaborative approach to risk management with risk accountability sitting squarely in the first line of defense can be the key to greater organizational resiliency and growth. That means:
- An engaged first line (i.e. senior management and business units) that makes risk decisions in alignment with strategy.
- A proactive second line (i.e. risk and compliance functions) that influences decision-making through effective challenge and timely consultation and collaboration.
- A diligent, independent third line (i.e. internal audit) focused on its core mission of protecting the organization and delivering value.
Across twelve risk areas we surveyed, respondents said their companies’ risks were currently owned and managed either collaboratively between the 1st and 2nd line functions (8 of 12 areas) or solely by 1st line teams (4 of 12 areas).
In all, nearly two thirds (63%) of our respondents said shifting more risk management responsibilities to the front line makes their companies better at anticipating and mitigating risk events. Furthermore, within the next three years, 46% of respondents indicated plans to further this shift.
2017 Risk in review study
Explore the clear and ongoing shift in the ownership of risk management to the front line… and why this can be the key to greater organizational resiliency and growth.