Companies might be skilled at handling credit, market and financial risk, but they are hopeless when dealing with emerging risk issues of climate change, holding on to talent, and terrorism, according to a new report.

A global KPMG report, Best practice in risk management has found that more companies were recognizing the risks that lurk in such areas as talent - otherwise known as human capital - reputation and climate change. While they handled reputation risk quite well, they struggled when it came to risks involving managing talent, regulatory issues, information technology, and so-called "tail risks" - unexpected events that include the impact of climate change and terrorism.


The Economist Intelligence Unit study canvassed the views of 218 executives from a wide range of industries around the world, with one-third each from Asia and Australasia, North America and Western Europe. About 50 per cent of the respondents were from businesses with turnover of more than $US500 million a year.

Fifty per cent of respondents identified the importance of the skills shortage issue but only 32 per cent said they managed these risks effectively.

Similarly, only 23 per cent believed their companies had effective plans to deal with the impact of climate change, which would include storms, fires and rising seas.

Just to put some of these findings into perspective. When it comes to climate change, for example, most companies are still trying to work out what it means. But the move to a global carbon trading regime means they don't have much time left. Once a cap and trade regime is operating globally, climate change risk will be a huge issue.