An insurer-commissioned survey of senior financial executives revealed the top operational risks their companies face, namely: equipment failure, cyber attacks and natural disasters.
The study,
Finance’s Role in Operational Risk Management: CFO Research on Building a Resilient Company, was spearheaded by international business property insurer
FM Global and executed by CFO Research Services.
Among the top operational risks, equipment failure ranked first, with 66% of executives saying that it had affected their company within the past five years. Nearly 60% of organizations have been hit by data breaches or cyber attacks, while 52% have been at the mercy of natural disasters.
One worrying finding was that more than half (54%) of the organizations have not developed or tested any formal loss recovery plans. Only 34% of executives surveyed reported that their firms are prepared to recover from equipment failure. Preparedness for other risks was even worse, with natural disasters at 33% and cyber attack at 24%.
The survey concluded that a large majority of organizations need to improve their resilience in the future, a thought shared by 86% of respondents.
“It’s surprising the number of companies that have been harmed by operational risk events, coupled with the relatively low number of companies that feel they are very well prepared for a disruption event,” said Eric Jones, operations vice president and global manager of business risk consulting at FM Global. “The findings reveal the opportunity for financial executives to implement stronger plans with increased data, to help move resilience forward within their organizations.”
The research, done in late 2016, polled 100 senior financial executives of US-based companies from a wide variety of industries. Majority of the organizations are part of the Fortune 1000 list.
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