Risk management has taken a hard knock in the last year, certainly as far as financial institutions are concerned. It is now more important than ever before that risk managers prove that they add value
One of the common grouches of risk managers has been that their efforts are not appreciated because they guard against things not happening. Therefore their work cannot be measured in the light of no catastrophes.
Well, that certainly isn’t the case today in the financial markets. And the economic crisis has revealed what might be viewed as a deplorable lack of risk management on the part of many organisations.
It is easy to say that many of the problems that have materialised relate to decisions that don’t come within the auspices of the traditional risk manager. But in the last four years or so, the focus for bigger organisations has been on enterprise risk management – an embedded culture and approach that embraces all parts. Further, the financial sector has embraced the concept of CROs probably to a greater extent than any other. So where were these C suite risk officers and their ERM when disaster struck?
To paraphrase a remark once made by former FERMA president, Thierry van Santen: the good news is that risk management is rising up the board agenda; the bad news is that today’s risk managers won’t be managing it.
And this is a real danger, which the economic crisis has brought far closer. As risk heads the boardroom agenda, some risk managers face the possibility of being slotted into a purely insurance buying role, with CFOs and heads of internal audit handling (or not handling) the true risks of the organisation.
Throughout 2009, StrategicRISK will be looking at how risk managers can raise their profile and communicate at the board level on issues that are vital to a company’s profitability and survival.
We also ask those of you who have successfully broken new boundaries or pioneered innovative risk management techniques to share your expertise by entering the StrategicRISK 2009 European Risk Management Awards.
Being shortlisted or winning an award is of course no panacea for the pressures that many organisations currently face. But it will provide a much needed boost of morale for your risk management team and champions. It will also go some way to enforcing the credibility of risk management in a world where the effectiveness of risk management and corporate governance approaches must be, to say the least, under review.
Sue Copeman, Editor, StrategicRISK