Companies must not freeze in face of bewildering array of risks

Companies cannot allow the sheer range and scale of threats currently facing European businesses to deter them from taking risks in pursuit of profit and expansion, according to a leading Spanish risk manager. This year’s European Risk Frontiers survey, carried out by Commercial Risk Europe with risk managers from across the continent, has found that recent events such as global cyber attacks, bewildering political challenges such as Brexit and the rise of protectionism leave risk managers facing a higher level of uncertainty than, perhaps, ever before. The biggest risk of all is that business leaders freeze in the face of such rapid and difficult-to-predict change, failing to take positive decisions to move their business forward. This is exactly the moment that risk managers need to rise to the challenge, according to Daniel San Millán, risk manager with leading Spanish conglomerate Ferrovial and former president of Igrea. He said risk managers must offer their colleagues and boards a structured way to identify and assess risk, and take measured risk-based decisions. “Risks are there. We need to take them and manage them,” Mr San Millán told fellow risk managers at the annual Risk Frontiers Madrid conference, hosted by Commercial Risk Europe in partnership with Spanish risk management association Igrea. “The key is not to avoid all risk but how you handle and manage risk. This year’s survey has found risk managers across Europe facing up to a lot of big risks. I recall huge events such as the terror attacks on the US in 2001 and the financial crisis of 2008. These were risks that were not seen and not managed. But if you do not take risks, nothing happens. You cannot do business without risk,” said Mr San Millán, who handed over the presidency of Igrea to Augusto Pérez, risk manager at Telefónica, last year. “The key is how to manage these risks. They will be there all the time and there will always be more new risks. Ask yourself – did risk managers prevent the crisis of 2008? It is about process, implementing a culture and management of risk,” he continued. Mr San Millán’s opening presentation followed a summary of the big risks identified so far in this year’s Commercial Risk Europe survey. Once again it seems that the main risks on the corporate agenda across Europe are macroeconomic, political and social. Major political events such as Brexit in the UK and the arrival of Donald Trump in the White House appear to have shifted the focus even further away from traditional asset-based insurable risk than ever before. “These risks are essentially not insurable, so have to be managed. I know that in this country it is often difficult because many risk managers do not sit near the CEO and other key decision makers. But we have to be there in such times because we know the process that is required to manage these risks. A risk manager cannot solve all these risks. But it is key that all processes needed are implemented to enable the management of these risks,” explained Mr San Millán. “We are responsible for preventing the problem from arising in the first place. We cannot tell managers what to do directly, but we can facilitate risk-based decision making,” he added. One delegate from the insurance sector later asked how the insurance industry can help risk managers move closer to the board and wield more influence. Mr San Millán said there is little the sector can do to help. It is up to the individual risk manager, hopefully helped by their association, to show their true worth, he said. “I don’t think that insurers can really help with this. This is something that we, as risk managers, have to do ourselves. The function needs to grow and be clear to the board how useful we can be, especially in times of crisis,” said Mr San Millán.

Companies must not freeze in face of bewildering array of risks

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