The strategic role is an opportunity – and a challenge
The trend for risk managers to take a more strategic role in their companies is an enormous opportunity – and a challenge. This conclusion comes from the findings of the 2016 European Risk and Insurance Report and the discussions which followed its publication at the FERMA Seminar in October.
The European Risk and Insurance Report contains the results of a European wide survey of FERMA members which has taken place every two years since 2002. This year, it received 634 responses.
One of the most important findings this year is that risk managers in Europe are taking a more strategic role in their companies with increasing access to top decision makers. Against this background, they have a wider vision of the risks that could affect the ability of business to achieve its objectives. Economic conditions rose to number one in the ranking of top risks, followed by business continuity disruption.
The discussions that followed the announcement of the survey findings indicate that this is an important time for the future of the risk management profession. Managing insurable risk remains important, and at the same time, risk managers believe that their role is about strategy, risk and change.
In today’s business environment, risk management is critical to corporate strategy and decision making, opening a great opportunity for risk managers to be the risk leaders.
Not necessarily obvious
Yet, the way forward is not necessarily obvious when the role of the risk manager varies greatly from industry to industry and company to company. The survey itself and the reactions to the findings showed that risk managers have a holistic understanding of the enterprise and how it works across silos. They are, however, likely to have deep, technical expertise on risk reduction and risk transfer, such as international programmes and captives and loss prevention. These skills remain important for many risk managers, as the survey findings indicated.
Crucial to this discussion is what other competences are vital for the risk manager who wishes to be the enterprise risk management leader. They have to be able to ask relevant questions to specialist functions, especially including IT, even though they are not IT specialists themselves. They may need to have different techniques at their fingertips, such as scenario planning and data analysis.
Today, risk management remains a varied profession. Risk managers in engineering companies will have an engineering background. Many still get useful experience as insurance brokers or underwriters. It adds to the different skills that risk managers bring to their organisations. Some challenges remain if the risk manager is to be seen as Mr/Mrs Opportunity, and not Mr/Mrs Threat.
New tools require maturity to use effectively. The risk manager needs both technical competences and soft skills such as communication, collaboration, developing good relationships within the business.
The next steps along the route for the risk manager are not necessarily obvious, and they may not be the same for every risk manager. FERMA believes this is where rimap® certification is important because it allows the profession to come together under one European designation without losing the range of skills and knowledge that makes risks managers so valuable in different sectors.
Snapshot of results from the FERMA European Risk and Insurance Report 2016
Risk managers are developing a more strategic role
- 68% are developing risk culture across the organisation
- 62% are using risk management as part of business strategy
- 59% are developing continuity, emergency and crisis management and incident response
- Two-thirds report to the board or top level management
Top business risks for 2016 – European insights
- 63% economic conditions (new number 1)
- 60% business continuity disruption (new on list)
- 59% political and country risk (diminishing)
+ rising concern about cyber-attack and data privacy – nearly two-thirds have no dedicated cyber risk insurance
Risk managers’ response
- Strengthen loss prevention activity
- Enhance risk insight
- Have a strong partnership with advisers, brokers and insurers
Priorities for FERMA
- Establish official recognition of risk management profession
- Advise on data protection regulation
- Represent risk managers’ view on corporate reporting and transparency