Shedding Light on Non-Financial Risks – a European Survey

Shedding Light on Non-Financial Risks – a European Survey — January 2012

2. A General View of the Situation and Challenges

Figure 2.1.2: Country group average of the importance of major non-financial risks How important to you are the following non-financial risks?

“Fr” is France, “UK” is the United Kingdom, “Ge+Au+Nl” is Germany, Austria and the Netherlands, “Lux+Irl” is Luxembourg and Ireland, and “RoE” is the rest of Europe. Answers are coded in the following manner: 0 for Irrelevant, 1 for Slightly important, 2 for Important, 3 for Very important.

Respondents are confident in their protection from non-financial risks Our question interweaves two degrees of insulation against non-financial risks. First, explicit protection might be used against some of the risks. Second, some choices in governance or investment practices, while not being an actual insurance, might largely mitigate the potential consequences of mishaps.

It is therefore interesting to look at how respondents feel insulated from non- financial risks. Firstly, overall it seems that respondents are quite confident in their protection. While only a few go as far as saying they are “completely” protected, there are less than 20% who feel “not at all” or “poorly” protected for each category of risk, with the exception of liquidity risk (30%). The rest is split between “rather well” and “very well” protected.

Figure 2.1.3: How protected from the following non-financial risks do you feel you are?

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An EDHEC-Risk Institute Publication