Title: Risk Management in Central and Eastern EuropeProject Leader: Dr. Leslie SHAWResearch Team Members: Dr. Leslie SHAW (ESCP Paris), Dr. Anthony EVANS (ESCP London), Mr. Nicholas Sarvari, founder and CEO, CNS Risk Ltd.

1. Topic

Risk Management in Central and Eastern Europe

2. Executive Summary

The ongoing financial crisis and downturn that began in 2008 was to a large degree the result of systemic failures in risk identification and evaluation and this has placed the risk management function in the spotlight.

It has also given risk managers greater visibility and authority as in the past they were often perceived as a brake on business by executives with a limited or non-existent knowledge of the risk function. Operational executives ignored warnings and pushed deals through to achieve both corporate and personal objectives.

Today, under intense scrutiny from investors, regulators, lawmakers, NGOs, media and other stakeholders, the roles and responsibilities of risk managers are evolving and they are now expected to perform a function beyond risk identification and assessment, control and monitoring to that of enabling risk-free growth by guiding investment and other strategic decisions. They are expected to provide analysis to set corporate strategy and help business managers achieve their objectives.

Our research project aims to survey the state of and prospects for risk management in Central and Eastern Europe, a business environment that offers considerable opportunities for investment and growth but also presents a high degree of risk. We are particularly interested in how the risk management function is perceived, to what extent the principles and practices of risk management are going beyond the boardroom to become embedded in everyday business processes and what barriers exist to making risk management an integral part of corporate culture.

We also expect the survey to reveal the new and emerging risks in the region and to highlight the differences between the target countries in terms of key factors in strategic risk management such as market volatility, corporate governance, compliance and regulatory stability.

Although the presence of risk in Central and Eastern Europe is generally accepted as a phenomenon of the transition to free markets, there is now a good deal of evidence to suggest that the Western led demand for transparency and compliance is also working itself into these economies.  The question remains, however, how deep the commitment to compliance really goes or how embedded it has really become.

Through an interview led analysis of compliance officers in local and international companies throughout the region, we propose to measure the progress being made in this area.  We will seek to present empirical, case-study driven findings on how companies perceive the requirements and how well they are actually doing in the delivery of compliance policies.  We will scope the shortcomings and challenges and discover who and what might represent the barriers for the region to shed the image of being a risky place to do business.

Project outline

1. Quantitative research - an online survey of dedicated risk managers, general managers, compliance officers and front-line staff using a questionnaire designed to identify the role and development of the risk function in their organizations.

2. Qualitative research - interviews with risk management experts.3. Case studies - 3 multinationals, 3 local companies.- The online survey will cover Poland, Hungary, the Czech Republic and Slovakia.

- The project will cover 5 business sectors: financial services, real estate, automotive, retail and communication & information technology.

- The target population will range from Board members through CEOs, Risk Managers, Business Unit Managers and front-line staff in multinationals as well as local corporations.

- Experts participating in the project will include academics and risk management professionals from France, Germany, and the UK.

Provisional timeline

- February/March 2013 : drafting of online survey questionnaire.

- April 2013 : sending out of online survey questionnaire.

- June-September 2013 : interviews with risk management professionals and target corporates (case studies).

- October 2013 : analysis of online questionnaire results.

- November/December 2013 : analysis of interviews.- January-March 2014 : drafting of article for publication.