Reputation management has become the biggest strategic risk consideration for global and local companies, and should be managed by leveraging modern communications technology and social media platforms, a recent strategic risk survey by professional services firm Deloitte has stated.

“The spread of risk is so much greater now and, as a result, companies have to be better prepared and faster to respond than they were as recently as five or even three years ago,” Deloitte Risk Advisory director Mark Victor said in a statement on Tuesday.

The report focused on strategic risk as one of four types of risks that were affected or created by a company’s strategy.

A central finding of the report, dubbed ‘Exploring Strategic Risk: A South African Context’, was that 81% of international respondents had an “explicit focus” on managing risk, while 88% of South African respondents indicated that their company had changed the way it managed risk over the last three years.

The comparative findings were based on a global survey of over 300 international senior managers and executive respondents from companies active in the consumer and industrial products industry, the life sciences and healthcare industry, the technology, media and telecommunications sector, the energy and resources sector and the financial services industry.

Globally, company brand and reputation emerged as a key risk, while South African executives identified customer and market concentration as their most evident risk.

Domestic executives further identified brand, talent acquisition, staff retention and political legislative trends as their second-biggest risk concerns, while their global peers identified the business model, economic trends and competition as their second-biggest risk factors.

“An example of political legislative trends can be seen in the latest credit as well as well as mining and resources laws amendment. Local executives then place the business model and how it is affected by technology as the next big risk factor,” Victor noted.

He added that a finding that was of concern to local business was that Africa, Europe and the Middle East lagged behind the process of integrating risk into strategy.

When asked to what extent they believed their risk-management practices supported their company’s ability to develop and execute its strategy, only 3% of respondents said “very well”, while about half, or 47%, said “well” and 49% indicated that practises were “not well” supported.

In comparison, in the Americas, 67% believed their risk and strategy integration was being “well” or “very well” achieved, while, in the Asia Pacific region, this figure was closer to 63%.

“Risk management and strategy integration is fast becoming a critical component of maintaining a sustainable, competitive advantage, as we see organisations move from using risk management for value preservation to also using it for enabling value creation. 

“This finding highlights an area for improvement, which more South African organisations should strive to address owing to the envisaged return on investment,” added Deloitte Risk Advisory director Vanessa White.

She held that the most interesting finding was how technology was seen as both an enabler and disrupter that could threaten a company’s business model, with 56% of South African respondents agreeing with the statement, just ahead of their global counterparts, at 53%.

South African executives identified the top five technology threats as data mining and analytics, social media, cyber attacks, cloud computing and mobile applications, while global executives listed social media as the top technology threat.