More firms taking federated approach to risk management practices
As better management of third-party risk has come to be viewed as a transformation opportunity, boards and senior leadership are taking on ultimate responsibility for extended enterprise risk management, according to a new report from professional services firm Deloitte.
The firm surveyed 1,055 governance and risk management professionals from organizations worldwide between November 2018 and January 2019, and just over half (53 percent) said they want a more coordinated and consistent approach to EERM across organizational functions.
Developments in EERM maturity have not kept pace with increasingly critical levels of dependence on third parties, and a majority of organizations (83 percent) reported that they had experienced a third-party incident in the past three years.
The economic environment continues to drive cost reduction and talent investment in EERM, the report said. The desire to reduce costs has become the biggest driver for investing in EERM maturity (cited by 62 percent of respondents).
Federated structures are becoming a dominant operating model for third-party risk management, as boards and executive management continue to take a deep interest in third-party risk management and want to provide more coordinated and responsive input.
More than two-thirds of respondents (69 percent) said they have adopted a federated model that allows for this sharing of responsibility. Only 1 percent of organizations considered themselves optimized to address all important EERM issues presented.