Earlier this month, we published a report that dissects global risk perceptions of business and technology management leaders. One of the most eye-popping observations from our analysis is how customer obsession dramatically alters the risk mindset of business decision-makers.
Out of seven strategic initiatives -- including “grow revenues,” “reduce costs,” and “better comply with regulations,” -- “improve the experience of our customers” is the most frequently cited priority for business and IT decision-makers over the next 12 months. When you compare those “customer-obsessed” decision-makers (i.e. those who believe customer experience is a critical priority) versus others who view customer experience as a lower priority, drastic differences appear in how they view, prioritize, and manage risk.
Customer obsession has the following effects on business decision-makers’ risk perceptions:
- Risk concerns heighten dramatically across several risk types especially reputational risk.Reputational risk concern more than doubles for customer-obsessed decision-makers, and other risks also see significant increases, including corporate social responsibility (CSR) and sustainability risk, regulatory and compliance risk, and talent and human capital risk.
- Security and privacy become important competitive differentiators. Information security and privacy is the second-highest risk concern for customer-obsessed decision-makers after reputational risk. And when improving customer experience is a critical strategic priority, business decision-makers are much more likely to view security and privacy efforts as key ways to better win, serve, and retain customers.
- Effective risk management programs are more integral to achieving company success. An effective approach to risk management leads to better analytics and risk context that provide deeper insight and understanding into firms’ current market positioning, potential threats to the business, and opportunities to grow revenues faster. Customer-obsessed decision-makers realize this, and are more likely to see risk management as a way they can improve strategic performance and make better, more-informed decisions.
Risk Management Faces A Major Wake-Up Call Start Dealing With Your Customer-Facing Risks
Given the rapid pace of digital disruption and changing business dynamics, an accurate understanding of your firm’s risk posture is more important than ever. One of the most neglected areas of risk for organizations today are customer-facing risks. In fact, only 2% of the risks discussed in the 10K reports of Fortune 500 that Forrester reviewed related to customer experience. This has to be a wake-up call for risk professionals to refocus on the initiatives your business leaders increasingly rely on to succeed and differentiate in the market today.
The global risk environment is never static nor is it homogeneous -- it’s constantly evolving with risk perceptions that vary across regions, verticals, and even different professional roles within your own company. Start to build a better understanding of your firm’s exposure in today’s risk environment by checking out our new report: Dissecting Global Risk Perceptions And The Effects Of Customer Obsession.
Let me know what you think, leave a comment below, and follow me on Twitter (@nickhayes10) to keep the conversation going.
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