Looking 20 years ahead, does the risk management industry still exist? Willis’s UK risk director Tim Chadwick examines whether risk management is an ageing profession
Is there really a preponderance of grey hair, and possibly no hair, lining the corridors of the many firms that constitute this fair land’s risk industry? Is the risk industry in the throes of significant risk? Looking 20 years ahead, does the risk management industry still exist?
The first question that needs to be asked is whether there is a consistent and widely accepted definition of what the risk industry is. The answer is no. The discipline has advanced and the definitions haven’t kept up. (Re)insurance will continue to be at the heart of the risk industry, but many different strands make up risk today, with the rise of ERM [enterprise risk management] and risk specialisms such as regulatory risk, financial crime, etc. Different strands in different sectors are likely to have different demographic profiles. For example, looking at ERM professionals in financial and professional services, it is clear that the jobs market is buoyant. This is largely a result of regulatory, legal, corporate governance and situational drivers, and a strong new generation is emerging.
This could be contrasted with more narrowly focused insurance-buying roles in organisations where there may be a more mature profile and, particularly, in some more traditional (re)insurance roles. My firm, Willis, recognises that in the future, the profile of the broker will be different, with the rise of the ‘analytical broker’, and it sees the need to source talent to match this new dynamic.
Perhaps the more important questions are not whether there’s an ageing, highly experienced risk workforce in the UK, but whether that knowledge and wisdom are being imparted at an appropriate rate and whether there are willing recipients to take up the mantle. So, is the risk management industry attracting talent, what are the vital signs and what else could or should be done?
From my own point of reference, there is firm and observable evidence that young talent is being attracted to risk roles in financial and professional services. Reports on the absolute numbers of relevant graduate places offered differ, but competition for places on graduate schemes clearly remains strong and graduates who are coming through are gifted and have the skill sets and potential to deliver key risk roles in the future.
Risk or many of the underlying skills that are required for risk roles now appear to be taught as part of many degree courses and, of course, an increasing number of undergraduate and post-graduate courses in risk management or specialised areas of risk are available. But what about school leavers and apprenticeships? HM Treasury’s recent paper, The UK Insurance Growth Action Plan, welcomed the industry’s proposal to double the number of technical apprentices in the next five years. Companies seem to be looking again at a more focused approach to school leavers and providing structured opportunities for this group. Although this makes sense and there are initiatives such as the Chartered Insurance Institute (CII) Trailblazer Initiative, this area really needs a lift in momentum.
Interestingly, the Treasury report cites that irrespective of the opportunities in the insurance sector it often finds it difficult to find the right recruits to meet the increasing demand at all skills levels. This is generally contrary to my own experience, but may be true. Given the boldness of the statement, it certainly conveys a depth of conviction and concern. The paper also states that “the challenge is to raise awareness of the opportunities available” which strikes a chord with me. While individual organisations, industry and professional bodies (such as the CII Discover Risk campaign) are positively contributing to the profile of the risk world and the opportunities within it, much more remains to be done.
So, what next? Risk management professionals need to more clearly defined and agree what the risk industry is and the roles and opportunities within it. This will enable us to determine the nature and scale of the risk we face and also the priority and pace with which actions should be undertaken. It will also assist in increasing the effectiveness of the marketing of the industry and its efforts to source young talent in the short and longer term.
At a more granular level, small steps can make a big difference. For example, risk leaders could actively work with their HR colleagues in terms of the design, promotion and operation of graduate schemes, apprenticeships and internships, and ensure young talent is mentioned. We could also encourage or require young talent to study for relevant professional risk qualifications and support them in doing so.
So, comfort or concern? I draw some comfort that the vital signs seem to be positive at the moment, but am concerned that we need better to understand the risk relating to an ageing population in our industry to then be able to make informed judgments about the sufficiency and pace of current initiatives, and whether this issue needs to be escalated and prioritised at a more macro level.
Tim Chadwick, UK risk director, enterprise risk management, Willis