This document discusses risk management strategies during economic slowdowns. It summarizes a survey of over 1,200 executives that found 73% believe risks are increasing but only 12% have effective risk management programs. Risk leaders view risk comprehensively across business units, align risk management with strategy, and spend more time preparing for than reacting to risks. They use tools like risk ratings, scenario planning and key risk indicators. Effective risk management allows for fast, confident decision-making and sustainable growth.

1. GLOBAL PERSPECTIVE
ON RISK MANAGEMENT
DURING ECONOMIC
SLOWDOWN
Matthew Pottle
April 2016
www.pwc.com

2. PwC
Traditional ways in which companies
typically try to retain their market position
and avoid the loss of profit during economic
downturn
1. Optimization of the
company's business
model
Reactive response to crisis
2. Optimization of the
company's finance
function
3. Strengthening of
risk management
function
Proactive response to crisis
• Working capital management
• Centralization and optimization
of the Treasury function,
including improvement of the
fund raising and allocation
process
• Optimization of the budgeting
process
• Corporate risk management (ERM)
‒ Identification of potential risks
at early stages
‒ Assessment of risk probability,
calculation of the risk amount
‒ Design and implementation of
the risk management strategy
‒ Progress assessment and
adjustment of the risk
management strategy
• Development and implementation of
corporate hedging programs
• Optimization of internal
business processes
• Optimization of headcount and
job responsibilities
• Development of specific "crisis"
client proposals and planning of
marketing campaigns
• Use of IT-solutions to improve
internal business processes and
quality of services
Reactive response to crisis
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April 2016
GLOBAL PERSPECTIVE ON RISK MANAGEMENT DURING ECONOMIC SLOWDOWN

3. PwC
2015 PwC “Risk in Review” Survey
GLOBAL PERSPECTIVE ON RISK MANAGEMENT DURING ECONOMIC SLOWDOWN
Driving performance and growth through
proactive risk management.
3
April 2016
1,229 senior executives
and board members
questioned on the topic
of risk management
73% of respondents
agreed that risks to their
companies are
increasing
Companies are not largely
responding to this
environment with
improved risk
management programs.
Only an elite group of companies (12% of the total surveyed)
have put in place the processes and structures to make them
true risk management leaders.

4. PwC
GLOBAL PERSPECTIVE ON RISK MANAGEMENT DURING ECONOMIC SLOWDOWN
4
April 2016

5. PwC
of the leaders surveyed (vs.
23% of non-leaders) are able to
see how a threat to one
business unit may threaten or
affect others
The ability to manage and reduce
risks at each level of business, with
both immediate and long-term
benefits to the company as a whole.
• Leaders understand risk as a web of
interlocking pitfalls and possibilities.
• Leaders make business decisions based on an
enterprise-wide view of risk.
• Enterprise-wide view of risk enables a clear
and realistic understanding of operational
issues and market opportunities.
of the leaders surveyed (vs. 27% of
non-leaders) are able to take a
comprehensive view of risk
across relevant business functions
when making decisions.
GLOBAL PERSPECTIVE ON RISK MANAGEMENT DURING ECONOMIC SLOWDOWN
5
April 2016

6. PwC
• For leaders good risk strategy equals good
business strategy.
• Leaders demonstrate greater cross-functional
alignment.
• Leaders are more than twice as likely as non-
leaders to leverage their risk management
programs during the strategic planning process
(78% vs. 38%).
of risk leaders (vs. 36% of non-leaders)
have deep alignment between risk
management and the company’s
strategic planning process.
GLOBAL PERSPECTIVE ON RISK MANAGEMENT DURING ECONOMIC SLOWDOWN
6
April 2016
With strategies aligned, executives are
able to make confident, rapid-fire
business decisions informed by highly
sophisticated risk evaluation.

7. PwC
• Forty-six percent of risk leaders say
they spend more time calculating and
preparing for risk than reacting to it
(vs. just 21% of non-leaders).
• Leaders have armed themselves with
a variety of sophisticated tools and
techniques.
can identify and forecast
emerging risks (vs. 59% of
non-leaders)
use risk ratings
(vs. 62% of non-leaders)
are building
organizational
resilience to risk
(vs. 42% of non-leaders)
have horizon scanning /
early warning indicators
(vs. 33% of non-leaders)
are monitoring key risk
indicators
(vs. 27% of non-leaders)
are engaged in
scenario planning
(vs. 33% of non-leaders)
conduct stress testing
(vs. 30% of non-leaders)
Businesses that are proactive
with risk can grow sustainably
in a volatile global marketplace.
GLOBAL PERSPECTIVE ON RISK MANAGEMENT DURING ECONOMIC SLOWDOWN
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April 2016

8. PwC
of risk leaders have a corporate risk
appetite statement that is well
communicated and understood
(vs. 20% of non-leaders).
• Risk leaders have a formal, well-understood risk
appetite framework.
• The framework clearly defines the level of risk the
organization is prepared to accept in relation to its
overall risk capacity.
• Leaders understand their risk tolerances.
• Leaders have greater clarity and confidence about
how their risks are being managed.
• Risk leaders have a higher appetite for risk than
non-leaders.
Fast, confident, risk-informed decision-
making can help companies compete more
effectively in a rapidly evolving business
climate.
GLOBAL PERSPECTIVE ON RISK MANAGEMENT DURING ECONOMIC SLOWDOWN
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April 2016

9. PwC
Five steps to risk management leadership
GLOBAL PERSPECTIVE ON RISK MANAGEMENT DURING ECONOMIC SLOWDOWN
Create a risk appetite framework, and take an aggregated
view of risk
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April 2016
Monitor key business risks through dashboards and a common
Governance, Risk and Compliance (GRC) technology platform
Build a program around expanding and emerging business risk,
such as third-party risk and the digital frontier
Continuously strengthen your second and third lines of defense
Partner with a risk management provider to close the gap on
internal competencies
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4
3
2
5

10. PwC
2016 PwC “Risk in Review” Survey
GLOBAL PERSPECTIVE ON RISK MANAGEMENT DURING ECONOMIC SLOWDOWN
10
April 2016
Risk agile companies are
more likely to expect
significant growth
Agility without resilience
raises business
sustainability risk
Risk agility + Risk resilience = Enduring Success

11. Thank you.
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