Economic and operating environment has been saved
Economic and operating environment
Extended enterprise risk management survey 2019
The economic environment continues to drive cost reduction and talent investment in extended enterprise risk management.
Ongoing uncertainty and distrust in the economic and business environment is having a significant impact on third party risk management. Dramatic shifts at the market level and increased regulatory and internal scrutiny, is driving organisations to focus on cost reduction, talent investment, and revisit existing operating models.
The main drivers for investing in third party risk management are:
- Cost reduction: 62% of respondents
- Reduction of third party related incidents: 50%
- Regulatory scrutiny: 49%
- Internal compliance: 45%.
Organisations urgently want to be more coordinated and consistent in extended enterprise risk management across their organisation. More than half say confidence in their organisation’s third party risk management is knocked by a lack of a coordinated and consistent approach. They also want to improve processes, technologies and real-time management information across all significant risks. To run such efficiency-gaining initiatives and be better coordinated internally, organisations recognise they need to invest in leadership with relevant EERM experience.
Our survey reveals that third party incidents continue to cause disruption with varying impact. The majority (83%) of organisations experienced a third party incident in the past three years. Of these, 46% experienced a moderate or severe impact on customer service, financial position, reputation, or regulatory compliance.
We believe the severity of consequences of negative actions by third parties on organisational reputation, earnings and shareholder value will continue to increase, and be a compelling driver for investment to improve third party risk management processes and frameworks.
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