ALEX HINDSON - Risk services manager, AstraZeneca plc
I think that the key issue that I've had in the last 12 months has been integration of risk management processes into the core business. Some would say this is a lifetime's work but we are making steady progress and are well organised to progress this. We have a cross-functional group with representatives from all key functions in the organisation. We are starting to make significant inroads with a 'pull' strategy of people seeing that risk management techniques and thinking can help them deliver their objectives and improve their processes. They are asking for help rather than us 'selling' them an alien concept. Clearly this is helping.
Integration will be key to managing risks in the sense of controlling at source.
A major issue to resolve is the impact of a growing compliance culture as a result of NYSE listing and the need to demonstrate in all areas compliance with the Sarbanes-Oxley Act 2002. And a key challenge is to keep the focus of risk management as integrated as possible across the business as a whole.
As far as risk transfer through insurance is concerned, there are very significant self-insurance strategies around product liability for pharmaceuticals.
These have been formalised in enlarged captives and also through membership of Pharmaceutical Insurance Limited, PHIL, a property/business interruption mutual set up by seven major pharmaceutical companies in 2003.
We manage to sustain very high quality catastrophe cover for property damage/business interruption and liability insurance but have taken the decision to self-insure some risks completely on the back of detailed risk analysis, such as marine/transportation risks. We have therefore been through an exercise of seeking to optimise the spend of our risk financing budget.
Insurer solvency is a concern but we are selective in terms of our long term partners.
The most valuable aspect of attending the AIRMIC conference for me is the potential to network and find out what other issues people are facing.
I'm also seeking some clarity and closure on the FSA regulatory issues.
JULIA GRAHAM - Director of risk management, DLA
Generally I would say that the rising tide of regulation and the impact that this has had on risk managers have to be among the key issues of the last year. In addition, organisations are increasingly needing to deal with the potential impacts of reputational risks. This is a very big area which I feel is generally poorly understood at present.
Also among the key issues for many organisations are those arising from globalisation and things like crime and terrorism. These include the introduction and spread of viruses on the internet and the impact of the activities of organisations like Al Qaeda. These can become very personal and immediate for an organisation when, for example, it has to withdraw its expatriates from Saudi Arabia.
In the immediate future these are probably going to remain the 'big ticket' issues. As far as new risks are concerned, I think that all organisations are taking a lot more time to try and understand what the emerging risks might be. They're spending more time thinking about what they don't understand rather than just looking at the past.
On the subject of ability to transfer all the risks I'd like, I suppose there's always some more risk that you'd like to transfer. But I'm very conscious of the fact that a large percentage of my risks are not insurable.
It would be very difficult to insure your reputational risk for example.
I have never felt that the ability to insure something should allow risk managers to be relaxed or too complacent about risk. But there are various quotes about insurance being the DNA of business and I firmly believe this.
There are other risks that I'd like to risk manage better and minimise through strategies other than insurance. Trying to understand the business continuity risks and how to deal with them is a big issue.
Like many other risk managers, I view insurer solvency as a relevant issue - although not the only one - when choosing our insurance partners.
We only deal with companies of a certain credit rating. However, I am slightly less concerned about this this year because of the rise in the stock market and the fact that some insurers are indicating slightly better prospects.
I would put networking at the top of the agenda as far as the AIRMIC conference is concerned. It's always a huge benefit with a conference of this kind. This is one of the few opportunities I get to meet my peers all at the same time in the same place talking about the same things.
There is also a great opportunity with the exhibition to get myself up to date on what is going on with potential suppliers - insurers, brokers and providers of other products and services. The education aspect is also valuable and I regard the presentations as an opportunity to continue my professional development.
COLIN CAMPBELL - Group insurance and risk manager, Arcadia Group plc
There have been both internal and external issues in the last 12 months. The internal ones stem from the fact that in the UK retail sector there has been quite a bit of consolidation and privatisation activity (Debenhams Private, Littlewoods, Safeway to Morrisons etc). The challenges of working with new owners in changing regimes and different ways of working generally raise the profile of the risk manager and the need for adaptability and quick thinking comes to the fore. The issues remain the same but the focus may be quite different and the approach to areas like corporate governance and general management of risk changes - as does risk perception.
As regards external issues, the insurance market appears to have settled down a little though certain areas such as liability remain difficult and challenging. Re-establishing or making new relationships with insurers is once again key. They need to understand our business and we need to understand theirs.
Underwriters are looking for more and more information to make decisions and in large organisations the level of detail required means time and resource have to be channelled into collection and analysis of the data (much of the information is of good value to the risk manager in affirming thoughts on areas of risk and key exposure).
Resolving these requires being both adaptable and pragmatic. It is important to always keep in touch with and maintain relationships with people both internally and externally. Trust and understanding are still key. Also essential is understanding your business's exposures and its risk retention capability/appetite, ensuring only the risks above this 'line' are transferred by finance (insurance).
I think these same issues will remain important throughout the next year.
But the fast pace of business and the environments in which we operate will ensure we have to remain flexible and able to respond to changes as they arise.
The terrorist threat is still very real and, as organisations become more global, the effects of situations across the world become more material and at the centre of each business.
We have not experienced any problems in transferring traditional risks.
However, we are looking to see what we can do in the captive arena to retain more risk both for traditional and non-traditional risks.
Insurer solvency has to be an issue and is one we consider when selecting to whom we are happy to transfer our risks. Will a major insurer become insolvent? Who knows! History suggests there may be surprises to come and, whilst we operate in an increasingly regulated environment, regulation has not proved to be a catch-all in the past. It is certain there will be issues of this type in the future.
I see attending the AIRMIC conference as providing value in a range of areas. As well as gaining benefits from networking with other risk managers and suppliers, I think that the AIRMIC members only sessions on Monday afternoon were very valuable in terms of knowledge take home and interface with other risk managers. The workshops and lectures look to cover a wide agenda and hearing the latest views on 'hot topics' will be crucial - including the end session on FSA regulation.
As an AIRMIC council member, it's good to meet new people and seek their views on AIRMIC and what they want from the organisation. It's a members based association - members are its 'blood' and main purpose - so it's important to grasp every possible networking opportunity and ensure the organisation evolves and grows to meet the needs of the membership.
I am chair of the AIRMIC NE area, managing this year's members only biannual convention (4-5 November in Harrogate) and I will be taking the opportunity at this week's conference to talk to members about the convention, enlisting help and ensuring the agenda for the convention is relevant, topical and of interest to the wide spectrum of AIRMIC members.
We are hoping for a large turn out of AIRMIC members at this convention which is also open to ALARM. It will be a further opportunity for networking in a perhaps more relaxed environment. The convention theme is 'Adding Value for a Healthy Future' and we hope to offer a good range of educational workshops and lectures in addition to the more discussion-based sessions.
