AFP and Oliver Wyman Release 2013 Risk Management Survey

           AFP and Oliver Wyman Release 2013 Risk Management Survey

Biggest risks to financial results are regulations, customer behavior, finance
pros say

PR Newswire

WASHINGTON, Feb. 27, 2013

WASHINGTON, Feb. 27, 2013 /PRNewswire/ -- Earnings uncertainty has increased
in the last five years since the onset of financial crises and will continue
for at least the next three, according to finance executives in a survey
released today by the Association for Financial Professionals (AFP). The
survey is the second in a series of annual risk-management reports published
with collaboration from the Global Risk Center of the Oliver Wyman Group.

The 2013 AFP Risk Management Survey asked CFOs, corporate treasurers and other
senior finance executives how their organizations are addressing risks through
a risk-adjusted decision framework that includes forecasting, risk culture,
organizational structure, metrics and other solutions.

More than half of respondents reported that their organizations are exposed to
more earnings uncertainty today than five years ago (58 percent).
Furthermore, more than half expect the forecasting of critical variables to
become even more difficult in the next three years.

Among these critical variables, the largest share of survey respondents (30
percent) cited macro-economic factors – such as GDP growth – as the most
influential ones driving earnings uncertainty, followed by financial factors,
external conditions, and commodities. Respondents from publicly traded
companies cited commodities as the most influential factor; those from
privately held companies tended to cite financial factors and business


Macroeconomic     30%      27%    24%
Financial           23%      17%    33%
External            19%      20%    13%
Business/Operations 17%      13%    22%
Commodities         11%      23%    07%
                    All Cos. Public Private


More than half of financial professionals report that it is more difficult to
forecast risk today than it was five years ago. Furthermore, the risks that
are hardest to forecast are having the greatest impact on earnings and will
continue to influence financial results in the future, finance executives say.
They predict the risks with the biggest impact are customer/satisfaction
retention (cited by 44 percent of respondents), regulation (37 percent) and
GDP growth (35 percent), followed by political risk (28 percent), interest
rates (21 percent) and credit risk (21 percent). Executives from companies
with revenues under $1 billion saw customer behavior as having the biggest
impact, whereas those from larger companies saw GDP growth as having the
biggest impact.

"From subtle changes in consumer tastes to sweeping changes made by
regulators, future risks can be difficult to manage proactively," said Jim
Kaitz, AFP's president and CEO. "That's why a risk mindset must permeate the
entire organization."

"Developing a sustainable competitive advantage in an increasingly uncertain
environment is the most important issue facing business today," says Alex
Wittenberg, a partner at Oliver Wyman and head of the firm's Global Risk
Center."Those companies that understand how risks inherent in their inputs,
outputs, and operations will explicitly impact their financial results are
more likely to seize on new opportunities and lead the pack."

To mitigate risks, executives report that they are responding with a strategic
investment of time, energy and resources. They are elevating the importance of
risk within their organizations by building awareness, testing assumptions
more widely, investing in IT, and providing advice and insight. Some
organizations are completely recalibrating their risk management structures,
reporting lines and internal partnerships because these are decidedly mixed
across organizations, the report showed. In addition, more than half of
respondents are conducting more reviews of emerging risks at a senior level.


In November 2012, AFP surveyed its senior level corporate practitioner
membership about uncertainty and the way their organizations manage risk. The
survey was sent to AFP members with job titles of CFO, treasurer, controller,
vice president of finance and assistant treasurer, generating responses from
547 financial professionals at a range of organizations, large and small,
public and private, across North America. Read findings from the 2013 AFP Risk
Management Survey (PDF): 


The Association for Financial Professionals (AFP) is the daily resource for a
network of more than 16,000 treasury and finance professionals. Headquartered
outside Washington, DC, AFP provides members with news, economic research and
data, treasury certification programs, networking events, financial analytical
tools, training, and public policy representation before legislators and
regulators. AFP's global reach extends to over 150,000 treasury and financial
professionals worldwide, including AFP of Canada; London-based gtnews, an
on-line resource for the treasury and finance community; and bobsguide, a
financial IT solutions network.


With offices in 50+ cities across 25 countries, Oliver Wyman is a leading
global management consulting firm that combines deep industry knowledge with
specialized expertise in strategy, operations, risk management, organizational
transformation, and leadership development. The firm's 3,000 professionals
help clients optimize their businesses, improve their operations and risk
profile, and accelerate their organizational performance to seize the most
attractive opportunities. Oliver Wyman is part of Marsh & McLennanCompanies
[NYSE: MMC]. For more information, visit


The Global Risk Center is Oliver Wyman's research institute dedicated to
analyzing increasingly complex risks that are reshaping industries,
governments, and societies. Its mission is to assist decision makers to
address these risks through research and insights that combine our rigorous
analytical approach to risk management with leading thinking from research

SOURCE Association for Financial Professionals

Contact: Dave Johnson, Media Specialist, Association for Financial
Professionals, +1-301-907-2862,
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