For some companies, the problems start with a siloed approach to financial planning and analysis (FP&A). Less than half of survey respondents (48 percent) said their FP&A team employs risk analysis on a regular basis; 29 percent said FP&A staff use risk analysis occasionally. The vast majority of FP&A teams that use risk analysis undertake scenario planning (69 percent of all respondents), sensitivity analysis (64 percent), and net present value (NPV—61 percent). Lower proportions use other analytical methods such as risk-adjusted cost of capital, value at risk (VaR), and Monte Carlo simulations (see Figure 2). More than a third of respondents think their strategic planning activities would benefit from more risk-adjusted analysis.

Only one in five (21 percent) reported a high degree of collaboration between their FP&A and risk management teams, while slightly more than half (53 percent) reported a moderate level of collaboration. Sixty-one percent of these respondents said that improving coordination between the FP&A and risk management functions leads to better forecasting because it improves the quality of finance and risk inputs from business units companywide. Fifty-seven percent said bringing the functions together improves the consistency of business and market assumptions, and for 56 percent it improves the consistency of data used for risk and FP&A analysis.

Perhaps that's why almost two-thirds of organizations have responded to current and emerging business risks by increasing their focus on risk culture and risk awareness. Other responses include growing the company's product lines (58 percent of respondents), expanding geographically (48 percent), increasing capital expenditures (46 percent), hiring external resources (44 percent), and accelerating merger and acquisition (M&A) activity. (See Figure 3.)