Report Summary

A growing number of organizations are developing enterprise risk-management (ERM) frameworks and other holistic risk-management approaches in response to an increasingly unpredictable global business environment. Doing so facilitates a focus on root causes rather than on the symptoms of shocks to their businesses. It also allows companies to take corporate risk management to a new level as they actively seek to anticipate, track and manage customer and supplier risks. Given the complexity of managing third-party risks across different corporate departments, many companies are turning to predictive analytics to gain a better and more complete view of long, complex supply chain and distribution networks.

Why read this report:

  • Companies that track risk-management outcomes (about half of our respondents) report substantially better performance. Nearly 90% of those who track customer risk-management outcomes say they manage those risks successfully, compared with 54% of those who don’t. For supplier risks, similarly, 85% of those that track outcomes report successful risk management, compared with 51% of those who don’t.
  • Executives say adverse supplier-related events are becoming more frequent and severe. Survey respondents who agree that supplier-related risks are worsening outnumber those that disagree by two to one. While executives are nearly as pessimistic about customer-related events, they perceive supplier-related risks as more challenging owed to limited visibility of the supply chain.
  • Most ERM practitioners make heavy use of data-driven analytics. Close to 70% of survey respondents successfully practicing ERM say they employ third-party databases, predictive analysis or both. Nevertheless, more than half of respondents in this category also point to managers’ personal judgement, and 82% rely on customer engagement assessment.
  • Many organizations without structured risk-management practices still report success in managing risk. A surprising 69% of these “nimble improvisers” (often representing companies with less than $500m in revenue) say they manage customer risk successfully and 61% say the same for supplier risk.