Risk management is getting a higher focus at Irish businesses in the wake of the pandemic and the war in Ukraine, a new survey by PwC has revealed.
Over three-quarters of more than 1,000 Irish professionals surveyed as part of a global study of 3,584 business and risk, audit and compliance executives said they were raising their spending on new technologies aimed at shielding their companies from external events and shocks. Roughly two-thirds of Irish respondents also said they were increasing their spend on risk-management practices and capabilities within their workforce.
Among the biggest perceived risks, respondents listed geopolitical developments, talent management, supply chain issues, regulatory compliance, cyber threats, environment and social governance (ESG) and external events such as inflation.
Fiona Gaskin, ESG risk leader at PwC Ireland, noted that climate change, one of the biggest risks we all face generally, is a multifaceted issue in a business context with the potential to amplify other threats.
“For example, it can quickly pose huge operational, financial and reputational risk,” she said. “As such, an organisation’s risk appetite and risk culture need to be sufficiently developed to identify climate change risks and opportunities and take the required action to embed a strategy setting the journey towards net zero. Not only will an organisation’s future existence depend on it but so will its reputation.”
Developing an appropriate risk culture based on the organisation’s appetite for risk was “key” to grasping the nature of the threats that it faced, PwC noted.
However, despite the seriousness of the risks in question, the survey suggests that organisations may not be adapting fast enough, PwC noted. Some 60 per cent of Irish respondents said they faced challenges due to the lack of a co-ordinated approach to business risk, compared with 60 per cent of respondents globally.
While investment in risk-management functions is on the rise, the survey also suggests that there are gaps in existing systems. Two-thirds of Irish respondents said they faced significant management challenges due to technology systems that did not work together and 36 per cent said they were only seeing tangible returns now from previous such spending.
“With the aftermath of a pandemic and now a war, sanctions and economic and supply chain disturbances, the world is very different to what it was a year ago,” said Richard Day, risk assurance leader at PwC Ireland.
“Based on the survey data and what global peers are doing, there is further scope for Irish businesses to invest in risk-governance structures, co-ordinate business risk-management practices and deploy technology over the medium term to facilitate risk-informed decision-making.”