The dynamic global environment requires that businesses become more adept at understanding and managing their emerging risks.  In the process, they may need to make fundamental changes in how they do business that translate into greater success, according to Mathew B. Allen, Global Practice Leader, Enterprise Risk Services & Solutions, for Marsh Risk Consulting.

Mr. Allen led a session on navigating the emerging challenges facing the global enterprise today at Institutional Investor's second annual Corporate Financial Executive Summit in New York City. More than 80 chief financial officers and other senior financial executives of major U.S. and Canadian corporations attended the summit.

"Today, multinational businesses face a wide range of concurrent and interdependent challenges, from fiscal crises in several countries to infrastructure issues and uneven and evolving international regulatory and governance protocols to the unanticipated consequences of recent volcanic eruptions, earthquakes, and other catastrophes," Mr. Allen said. 

"To succeed, businesses need to understand how value is created in their organizations; identify, quantify, and prioritize those exposures that could most impact value-creation activities; and address potential consequences in the most cost-effective ways."

According to Mr. Allen, the keys for organizations' approach to risk include:

• take a long-term approach to global risk identification, analysis, tracking, and mitigation;

• use frameworks that reflect risk interconnections rather than silo approaches;

• address the need for more robust data on key risks and trends and share in a coordinated manner;

• conduct cost-benefit analyses on risk solutions to improve resource allocation and better understand investment choices; and

• communicate clearly and consistently about the nature of threats and strategies to manage and mitigate them.

During Mr. Allen's session, participants identified bottom-line risks, considered their short-and long-term implications, as well as discussed ways to adapt their planning processes to meet these emerging challenges and gain competitive advantage.