Pages from Deloitte report Global-risk-management-survey-12th-edition PDF

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Global risk management survey, 12th edition

Key findings

Continuing concerns over cybersecurity. Institutions have faced cyberattacks for a number of

Increasing credit risk. Concerns over credit risk

years, but the threat has only grown with many

typically peak during economic contractions and,

employees working at home due to COVID-19.

not surprisingly, 20% of respondents named credit

Thirty percent of respondents named cybersecurity

risk as the risk type that will increase the most in

as one of the three risks that would increase the

importance for their institutions over the next two

most in importance for their institutions over the

years, more than for any other risk type, compared

next two years, the second most highly rated risk.

with only 3% in 2018. Sixty-two percent of

Only 61% of respondents considered their

respondents said that credit risk measurement will

institutions to be extremely or very effective at

be an extremely or very high priority for their

managing cybersecurity risk, and 87% said that

institutions over the next two years with this being

improving their ability to manage cybersecurity risk

further iterated during the interviews. Respondents

will be an extremely or very high priority over the

said that many areas of credit risk management will

next two years. Respondents most often considered

be extremely or very challenging for their

staying ahead of changing business needs (e.g.,

institutions over the next two years, including

social, mobile, analytics) (67%) to be extremely or

collateral valuation (48%), commercial credit

very challenging in managing cybersecurity risk,

(48%), commercial real estate (43%), unsecured

which may be due to the changes in working

credit (43%), and leveraged lending (41%).

practices, the business environment, and consumer behavior in 2020 There has also been keen

More focus on nonfinancial risks. Institutions

competition for talent across all industries in this

have recognized that nonfinancial risk types can

area, and 57% of respondents said that hiring or

have wide-ranging financial and reputation impacts.

acquiring skilled cybersecurity talent is extremely

While almost all respondents rated their

or very challenging.

institutions as extremely or very effective at managing financial risks, the figure dropped to 65%

Addressing risk from third parties. Third-

for nonfinancial risk overall and was even lower for

party relationships present a distinctive set of risks

specific types and aspects of nonfinancial risk such

including data privacy, nonperformance, unethical

as conduct and culture (55%), geopolitical (42%),

conduct, and the loss of business continuity, and

and data quality (26%). Forty-four percent of

have received increased attention from regulatory

institutions reported having a single individual who

authorities. Only 44% of respondents rated their

is accountable for oversight of the general category

institutions as extremely or very effective in

of nonfinancial risk. Many institutions have work to

managing third-party risk, placing it 30th out of 33

do to enhance their capabilities in this area. No

risk types assessed. Not surprisingly, 64% of

more than one-third of respondents said that

respondents said improving management of risks

several methodologies for managing nonfinancial

from third parties will be an extremely or very high

risk are extremely or very well developed at their

priority over the next two years for their institutions.

institutions, including causal event analysis (33%), scenario analysis (25%), risk and capital modeling

Spotlight on environment, social, and

(25%), scorecards (23%), and external loss event

governance risk. With growing concern over

data/database (21%). None of the respondents

climate risk and increasing attention to the social

rated their institutions even this highly when it

responsibility of business, ESG concerns—

came to use of alternative data such as

including climate change—are receiving greater

unstructured data.

attention from financial institutions. ESG was named by 38% of respondents as being one of the

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