Risk-taking is a key part of business development. This was the key message of a recent survey conducted by Liberty Mutual Insurance and CFO Research, where 68 percent of business leaders reported that strategic risk is essential to meeting revenue and earnings targets.

But taking on risk is, well… risky. How do you balance a dynamic risk strategy with protecting established priorities and key resources? The survey offered three ways to set a more confident course for strategic corporate risk-taking.

1. Plan, Project, and Benchmark

The survey found that only a little more than half (58 percent) of companies consistently benchmark their risk-management performance against industry peers – including such key factors as insurance claims costs, number of incidents, and legal dollars spent. When it came to planning for best-case/worst-case scenarios, the numbers were worse: slightly less than half (48 percent) of companies claim to do so on a regular basis.

“Sixty-eight percent of business leaders reported that strategic risk is essential to meeting revenue and earnings targets.”

Rather than defensively reacting to situations as they arise, proactively managing risk allows organizations to keep up with ever-changing market trends. To steer competitiveness, forward-thinking research and forecasts are key steps – and this includes benchmarking and projecting.

Additional Read: 6 Barriers to Strategic Risk-Taking for CFOs

2. Rely on Insurance

Sixty-eight percent of survey respondents reported that having the right insurance program mitigates risk, reduces earnings volatility, and bolsters business value. And 56 percent of respondents agree that ROI on insurance programs is far-reaching – helping the organization achieve overall business goals. In particular, survey respondents ranked these critical safeguards as the top areas where insurance helps them significantly mitigate risk:

  • Employee safety (87 percent),
  • Cybersecurity or data breaches (78 percent),
  • Third-party lawsuits (77 percent),
  • Employment-related lawsuits (77 percent), and
  • Regulatory compliance (63 percent).

“In the study, 56 percent of executives agree that ROI on insurance programs is far-reaching – helping organizations achieve overall business goals.”

Despite its obvious benefits, however, insurance is still under-utilized, with only 43 percent of surveyed companies using insurance to mitigate the majority of their overall risk. Companies should evaluate how they can use insurance to transfer more of their risk in order to safely grow, guard against data breaches, avoid or defend legal challenges, and make better decisions.

Additional Read: The Real Value of Recognizing the Total Cost of Risk

3. Assign a Risk Manager

According to the survey, only a little more than half of all businesses (56 percent) have a dedicated risk manager. A risk manager is increasingly important because it emphasizes the value of prudent risk management to the company as a whole. Moreover, creating an entire role dedicated to this responsibility – rather than assigning risk management as one more task in a long list of duties for a CEO or CFO – allows for more detailed planning in major risk areas, such as:

  • Cost of capital,
  • Financial regulations,
  • Information security, and
  • Internal planning and reporting.

In addition, a chief risk officer prioritizes the risks by developing a high-level assessment of their probability and likely impact – which improves the company’s ability to plan and respond effectively.

Additional Read: How CFOs Can Foster Strategic Risk Taking and Drive Business Results

Laying the Groundwork

In today’s constantly changing business environment, smart risk-taking is a must to grow and compete. But it’s only possible to take on risk if your organization is prepared and protected. Lay the groundwork by aligning risk management with overall business strategy, and strengthen your position as a leader in the type of strategic decision-making that will drive your company forward.

Liberty Mutual can help business leaders make a stronger connection between risk management and performance management. Improve your organization’s resilience by learning more about risk management, insurance, and further results from the survey here.