1

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Corporate RiskBridging the Leadership Gap

22 Member Associations in 20 Countries

Over 4300 individual

members who are

responsible for risk

management and/or

insurance in their

organisations

Purpose

Co-ordinate, promote and support the development

and use of risk management, insurance

and risk financing in Europe

Be a significant stakeholder in the

decision making process at the European level on

risk management, insurance and risk

financing

Profession

Innovation

Diversity

Leading risk management

and insurance across Europe

Global Risks beyond regular Board activities

Risk maps focus on controllable risks

Global risks are big and catastrophic

Boards unclear how to manage these risks

Yet the Board is best placed to manage

Focus on impacts, outcomes and consequences

for operations, not the risks

Check critical dependencies

Check and reinforce crisis management

Improve risk radars

Focus on agility

Top 10 2014 2012 Mitigation Satisfaction

1. Political – Government intervention, legal & regulatory changes

2. Reputation and brand

3. Compliance with regulation and legislation

4. Competition n.c*

5. Economic n.c*

6. Market strategy, client n.c*

7. Planning and execution of strategy

8. Human resources / key people, social security (labor)

9. Quality (design, safety & liability of products & services)

10. Debt, cash flow n.c*

2014 FERMA Survey and Risk Map

Source - FERMA Risk and Insurance Report 2014

Roads to Ruin and Roads to Resilience’

Roads to Resilience 2014

(Cranfield)

Why did companies succeed?

Exceptional Risk Radar

Flexible and diverse resources

and assets

Strong relationships and

networks

Rapid response capability

Constant review and

adaptation

Roads to Ruin 2011 (Cass)

Why did companies fail?

Lack of board skill and NED

control

Board risk blindness

Leadership failures

Poor communications

Organisational and risk

complexity

Inappropriate incentives

Risk management ‘Glass

Ceiling’

The categories of risk related corporate failure

Failure of corporate strategy - e.g. Enron

Failure of the business model - e.g. Northern Rock

Failure to manage reputational risk - e.g. Arthur Andersen

Failure to respond appropriately to catastrophic events - e.g. Railtrack

The Resilient Company?

Source - Roads to Resilience Airmic and Cranfield

What makes a company more or less resilient?

Source - PwC

Risk Governance perceptions - before the crisis

Risk Governance reality - after the crisis

MANDATE

Culture

Values

Ethics

Tone set from the top

RISK ASSESSMENT

Culture

Discussion

Capability

Information and communication

Accountability and delegation

Advice and assurance

Effective risk culture

RISK

RESPONSIBILITYRisk management process

Principle risks and appetite

Risk culture and assurance

Risk profile and mitigation

Monitoring and review

Risk communication and reporting

Sound system

What every Board member needs to know

The board should regularly update and refresh their skills and knowledge

Board

responsibility

Board requirements Risk Manager contribution

1. Risk

management

processes

risk management

and internal control

systems that identify

the risks facing the

company

responsibility for planning,

designing and facilitating the

implementation of the overall risk

management process for the

company

devise risk management systems

and procedures that ensure that

the approach to risk is co-

ordinated and not fragmented

record the risk management roles

and responsibilities, as part of the

risk management systems and

procedures

develop the risk management

manual for the company, including

the statement of risk management

strategy

Inputs

• Financial

• Manufactured

• Intellectual

• Human

• Social and

Relationships

• Natural

Consider:

- Supply and

demand

- Cost

- Availability

- Quality

Business

activities

• Strategy

• Processes

• Projects

• Incentives

• Distribution

Consider:

- Changes to

activities

- Process

- People

- Technology

Outputs

• Products

• Services

• Finances

• Infrastructure

• Intellectual

Property

• Brands

Consider:

- Supply and

demand

- Quality

- Consistency

- Distribution

- Distinctiveness

•

Outcomes

• Market Share

• Reputation

• Profitability

• Share price

• Customer

Satisfaction

• Sustainability

Consider:

- Stakeholders

- Risk and

reward

- Long-term

viability

Effective Risk Leadership could prevent failures?

Ability to see ‘out of the greenhouse’ and to engage widely with broad networks

Ability to provide independent support for the board through objective, fact based, assessment and research

Scope to assess reputational risk exposures

Scope to plan appropriate crisis responses

Why is this important?

Business becoming more global

Increasing dependency on technology

Risks are becoming more virtual

Increasing complexity of risk

From defense to offence

Insurance Buyers

• Administering

Hazard

• Managing

Integrated

• Directing

Strategic

• Leading

1950’s – 60’s 1970’s – 80’s 1990’s 21st Century

Shifting Perspective from “Cost / Benefit” to “Risk / Reward”Copyright Risk and Insurance Management Society, Inc.. All rights reserved.

Source - RIMS

Balances Stakeholders

Collaborates

Drives EngagementCourage

Ensures Accountability

Dealing with Ambiguity

Vision & Purpose

Cultivates Innovation

Strategic Mind-set & Business Insight

Strategic Advisor and providing confidence to the Executive

Culture Change & Operational Effectiveness

Stakeholder Engagement

Leadership & Succession

New demands need new requirements

Career Experience/ Risk Sophistication

Fragmented

Co-Ordinated

Influential

Leadership

• Business Insight

• Technical Skills

• Builds Networks

• Communication

• Priority Setting

• Managing

Systems

• Strategic Insight

• Stakeholder Skills

• Courage

• Ensures

Accountability

• Credibility/Stature

• Vision & Purpose

• Political Savvy

• Drives Engagement

• Ambiguity

• Deal with Paradox

• Innovation

• External Perspective

in leadership capability

step-change

requires

advance

Each

Risk Management to Risk Leadership

We need to step away from risk managers who block and obfuscate new initiatives, to a leader who helps a business manage and mitigate in a strategic way

Andrew Blowers OBE

Chair of Risk, AA

“I am, like many CEOs, wary of Risk Management because of its reputation for being a box ticking function…

…I fundamentally believe that all the leadership are responsible for managing risk in a way that is forward thinking and commercial..”

Andrew Miller

CEO Guardian Media Group

Source - Tomorrows Risk Leadership

Airmic and Tomorrow’s Company

FERMA Certification

Know

ledg

e

Expe

rie

nce

Certification

Co

ntin

uo

us

Pro

fessio

na

l

De

ve

lop

me

nt

Accreditation

Eth

ics

Certification Content

Certification programme

Accreditation

• Risk management diplomas

Certification

• Risk Managers

License

• CPD events