Today, the Association for Financial Professionals (AFP)released the results of its “2014 AFP Risk Survey,”sponsored by Oliver Wyman. The survey of 554 AFP members revealedthat although organizations expect the global business environmentto remain challenging this year, finance executives are now morefocused on internal issues than on the macroeconomic climate.

The external environment continues to cause concern: Forty-fivepercent of respondents said their company is exposed to moreearnings uncertainty today than it experienced three years ago, andonly 16 percent said they're now operating with less uncertaintythan in 2010. The causes vary. Just over a quarter of respondents(26 percent) cited financial factors such as credit, liquidity,interest rate, and currency risks as the primary driver of theirearnings uncertainty. Almost as many (23 percent) citedbusiness/operational risks (e.g., supply-chain disruptions,litigation, IT), and another quarter selected external factors suchas regulatory and country risks. Only 19 percent reported thatmacroeconomic factors, such as GDP growth and inflation, are thekey driver of their earnings uncertainty.

To manage their financials amid these uncertainties, companiesneed to accurately forecast their myriad risks—but that's easiersaid than done. For 35 percent of the companies represented in theAFP survey, forecasting risks is more difficult today than it wasthree years ago; risk forecasts are easier today for only 23percent of respondents. Almost a third of finance executives saidthat capturing relevant data from external sources causesforecasting challenges, but many more said it's challenging tocapture relevant data from within the company. (See Figure 1.)

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