Marsh report suggests regulation in the UK is seen as key risk issue
Is regulation in the UK over-zealous and inhibiting our competitive advantages? This could be an understandable conclusion from the Marsh research report ‘Managing Risk in Europe 2007’, published today. UK risk managers were the only ones across 10 European countries that cited regulatory risk within their top three risk issues, giving it top position.
Marsh’s Eddie McLaughlin comments:"The Financial Services Authority is seen as the leading light of European regulators and the UK has probably advanced more in regulation of this sector than anywhere else. In fact there is some suggestion that we are over-regulated and perhaps should move more to self-regulating strategies rather than prescriptive controls."
Another surprise in the report was that brand and reputation risk did not make it into Europe’s top six risks. McLaughlin says: "I think this is because brand and reputation damage is an outcome rather than a risk in itself. It generally results from the one of the issues that did make the league table."
McLaughlin explains that Marsh commissioned the research to find out: the main risk concerns across Europe; the level of confidence in managing these risks, and the future direction that we can expect risk management to take. The study reveals that the top six risks affecting European companies today are: people related risks; competition; business interruption; environmental considerations; financial risks, and damage to physical assets.
In addition to regulation, UK risk managers cited competition and employers’ liability as second and third top risk issues. They were least confident about managing employers’ liability (a confidence level of 3.2 out of 5).
Seventy seven of the 100 UK companies included in the study believe that the trend is to focus on managing risk over buying insurance; only four companies disagree with this statement. However, despite the relative maturity of the UK’s approach to business risk management, less than half (45%) of respondents are confident that their risk management budgets will increase.
The Marsh report’s finding that regulation is perceived as the biggest UK threat echoes the findings of Protiviti’s Risk Barometer, published last month, which concludes that UK companies see regulation as posing the largest external threat, while customer satisfaction is seen as greatest risk from within. Second and third in Protiviti’s top three external risks were ‘the market’ and competition.