Sue Copeman interviews AIRMIC’s new chairman, Julia Graham
What do you see as the greatest challenges in your forthcoming year as chairman? And what’s your theme for the year?
My first response is that out of every adversity comes opportunity. The current concerns arising from issues like sub-prime are increasing the profile of risk management and risk managers. Both have to be ready to raise their game and respond. In any industry people can see that risk management has a role to play.
Rather sadly, the recent disaster in China also raised the profile of other risk related issues like business continuity and health and safety. I was in China after the earthquake and had the opportunity to speak to someone who runs a business in the area affected and talk to them about some of the issues.
We have had terrible things happening both financially and physically and both place under the spotlight the profile of how important good risk management can be to the survival of an organisation.
One of the greatest challenges is making sure the risk manager is positioned to build on these opportunities. There is a very clear opportunity for all of us to pick that baton up and rise to the challenge.
My theme is supporting the risk manager. There are a number of aspects to this. First, there’s the position of the risk manager in an organisation, making sure that they keep their senior independent voice and it does not get buried away somewhere else.
Second, allowing risk managers to deliver that option means they need to be able to obtain the necessary training and skills. Risk managers face a lot of challenges and, if they’re going to convert these into opportunities, they’re going to need the type of skills possessed by someone with an MBA rather than just A levels. If you are going to demonstrate the importance of a risk to your organisation, you have to have a professional profile and the competence not just to talk but to deliver.
I want to see AIRMIC really helping the risk manager to achieve all these things. And I also want to focus on risk management as a significant career option.
There are going to be big challenges this year – so it’s important for risk managers everywhere to take a lead. Someone asked me whether or not I thought insurers would use the current opportunity to nit-pick through their policy wordings and exclusions. I do not think they will. The biggest challenge for everyone in the industry is holding steady and not panicking. No-one wants to revert back to the spikes we have seen in the insurance industry in previous years, and good risk management helps you to avoid these spikes.
One of the big challenges for the industry, particularly in this volatile world we live in, is avoiding surprises. When I’m giving a presentation, I often use a slide of a train coming along the track. I want to be in the driving seat, not lying on the track. Most of what I do in my own job is to develop stability, convert opportunity – and avoid surprises.
How can risk managers communicate to the board? And how can we promote the importance of the risk manager’s role?
At the moment risk is associated with some of the biggest issues that the board wants to hear about. Promoting the importance of the risk manager’s role involves using our networks and knowledge, gaining additional insights through publications like StrategicRISK, and showing the board that we have a value to add in helping the organisation understand where it wants to be heading and how it can do that safely. In my experience, basically it’s about demonstrating your knowledge and your values. That’s easy to say but more difficult to deliver.
I believe that getting the attention of the board means engaging in subjects that they are in tune with. For example, one of the things that I do in my own work is tracking my prime insurers. I track their credit ratings and their risk ratings, almost doing a risk watch. My board sees that as a useful and proactive initiative. It captures their attention as something which is adding to value.
One thing that people tend to do when you’re in a recession is to cut corners. Risk management can make sure that the policies, systems and controls you have in place are holding true. It’s easy to loosen up when things are tight and organisations are looking for sales so it’s important to make sure the wrong corners are not being cut.
I do think it’s going to be a difficult and challenging year.
“The current concerns arising from issues like sub-prime are increasing the profile of risk management and risk managers.
Do you think there’s a place for corporate risk officers in the UK?
Yes, and one of the things that might drive this is the maturing of enterprise risk management. The CRO covers all areas of risk and you have to have the ERM approach for that to work. Some of the work AIRMIC is doing on approaches to ERM is going to stimulate that. However, I doubt whether this will mean that we see a spate of CRO appointments.
Of course, CROs are well established in financial institutions but very often their role includes the financial function. That’s very rare in non-financial businesses. I read some research three years ago involving a number of senior risk managers and their view was CROs, already well entrenched in financial services, would grow substantially and become more commonplace in other industries in the next two years. I don’t think that has happened but I do think it may yet happen. More organisations are going to take this route so that they can get the big picture of risk. If risk and ERM are high on the agenda, the concept of the CRO is likely to have a boost this year.
Whilst there is no template or blue print, the article in StrategicRISK in May this year which focused on CROs talked of the CRO as a combination of police officer, teacher, counsellor and business leader. I think this very well describes my own role at DLA Piper. These terms are useful to illustrate and communicate the role to an audience less familiar with the concept of risk management removed from that of insurance buyer.
Where would you like to see AIRMIC positioned in five years time?
We now have John Hurrell on board. I was very supportive of John's appointment. David Gamble had done a fantastic job for AIRMIC, getting it to the position we’re in today. But it was time for a change and we are very lucky to have someone with John’s background and standing who is willing to work with us and has a wealth of direct industry experience.
I’d like to see AIRMIC focusing on the market we serve and not trying to dabble in too many niche markets. Our focus is on large to medium sized enterprises. We have a predominance of FTSE listed members. And it’s important not to take too many steps away from where your strengths are. I think we should be concentrating on and improving our game in these key area. In five years time, I hope AIRMIC will be a successful, profitable professional body which supports the niche members that we have chosen to have.
What are you looking forward to most in your year as chairman? And what are you looking forward to least?
I’m looking forward most to giving back something to an industry that has given me so much – a career of 35 years that has offered challenge as well as a great deal of fun. That sounds trite, I know, but it’s how I feel. I’m really looking forward to telling people what a great career risk management is and using my role as chairman as a platform to do that. I am passionate about the role of the risk manager. It can be a fantastic career and I want to share that with people.
I’m also looking forward to establishing, maintaining and reviving networks and connections old and new, and to moving AIRMIC forward. At the end of my year, I would like people to say I was part of getting the organisation to where it is. And I’m really looking forward to working with John and the council. I have a super deputy in Paul and a very good alternate deputy is also coming in. We have a great team.
There’s really nothing that I’m not looking forward to except perhaps with a very busy ‘day job’ for finding the time. I do think that some of the challenges we face are going to be stretching. It’s not going to be an easy year for risk managers. There are going to be some difficult things to deal with – but hopefully not too many surprises.
What are your personal interests?
I live on the coast and I love everything about the sea and that environment. I also live near ‘Glorious Goodwood’ and I like going to the races during the summer.
Also, I’m a bit of a geek. Having written one book with David Kaye (A Risk Management Approach to Business Continuity) and just updated that, I’m thinking that when I get close to the end of my term as chairman, I might start writing another one. I just enjoy the research and the learning involved.
I also love cooking Italian food. And, finally, I’ve got two daughters who oversee me very closely and quite often tell me exactly what my personal interests should be!