Need for action amongst Swiss companies
06.05.2016 - In a study, Funk Switzerland explored how Swiss companies handle risk management. The result: apparently many companies have not yet come to the point of implementing professional risk management.
In theory, they mostly all agree how an efficient risk management system should be designed. But in practice, risk management approaches sometimes differ greatly, especially in terms of methods used and organisational setup. According to their own statements, a majority of Swiss companies operate some form of risk management. But does their risk management approach actually do what it promises to do in theory? And how do processes and methods need to be set up so that risk management really helps a company progress? Funk Switzerland addresses these questions in a current study entitled ‘Risk management – added pressure or added value?’
Approximately 1,000 companies from Switzerland’s German-speaking region were invited to take part in the widely distributed survey.
The most important revelations from the Funk study are presented here:
Total risk is widely unknown
88 per cent of the companies surveyed either do not calculate their total risk or use inappropriate methods to do so. Both of these practices pose an existential threat, primarily if the total risk exceeds a company’s risk bearing ability. Conversely, a company could reserve too much risk capital due to the lack of knowledge of the total risk, instead of using this capital productively.
The importance of risk management is underestimated
Risk management is aimed at defining suitable strategies for counteracting the identified and assessed risks, implementing these strategies efficiently, checking their effectiveness and evaluating them against the background of set objectives. Surprisingly, around a third of the companies surveyed in the study do not implement a risk management approach that meets these criteria.
Specialised software is key to successful and efficient risk management
68 per cent of the companies surveyed use Microsoft Excel to implement their risk management approach. Only 19 per cent of the companies use specialised software solutions. In its original form, Excel is a static tool. Dynamic and specialised risk management software can automate the process and simply reporting to a great extent. Especially useful is a software solution that can link multiple systems with each other (such as a risk management and internal control system).
Funk expert Max Keller, who initiated the study, provides his comments on the results: ‘Even if many companies run their risk management at a solid level, there is a need for improvement. With increasing risk complexity, the requirements in this field are also constantly growing.’ According to Keller, the study will be interesting not just to Swiss companies, but also to Germany companies with offices in Switzerland.
Want to know more about this topic? Request our exclusive study, ‘Risk management – added pressure or added value?’ here as a PDF.