Enterprise-wide risks demand an enterprise-wide network of friends

The CFO should be the best friend of a pure insurance manager, but if that individual holds a wider risk management brief they need to be close to all key functions within the organisation such as IT, legal, health and safety and HR, according to leading members of the German risk management association GVNW. In Germany, as elsewhere in Europe, risk and insurance managers find themselves increasingly in close contact with their IT colleagues as cyber rises up the agenda, agreed the group of risk managers who took part in the German leg of our 2018 European Risk Frontiers survey. Cyber risk, as with other critical risks such as supply chain, are by their nature enterprise-wide and therefore need to be managed on a group-wide basis, involving key figures from across the organisation. These risks cannot be managed in silos and adequate insurance protection cannot be secured without cross-function cooperation and coordination, agreed the senior GVNW group. The rise of these enterprise-wide risks has inevitably forced insurance managers in German companies, as elsewhere in Europe, to take a broader risk management role, and gives the profession a great opportunity to prove its value to wider management. Insurance managers in Germany and across Europe need to embrace this opportunity to sell the value of the profession and step away from the idea that boring old insurance is just an unwelcome cost. “The CFO is clearly the best friend of the traditional insurable risk manager,” said Alexander Mahnke, president of GVNW. “But if you are talking about the broader risk management community, then it really depends upon the topic under discussion. If you are talking about cyber then you need to work closely with the enterprise risk management department, if there is such a thing. You need to work closely with IT if it is separate from IT security. You also need to work with security, environmental and even health and safety. You may also need to work with HR because there will be employee issues to deal with, and legal. All internal services need to be involved,” he added. Hans Joerg Schill, risk manager for Fraport (Frankfurt airport) and head of its captive broker Airport Assekuranz Vermittlungs-GmbH, agreed with Mr Mahnke. If one had to choose a single individual as a best friend within the organisation then inevitably it would be the CFO, he said. “If you report directly to the CFO as a risk and insurance manager then they would need to be your best friend,” he added. Mr Mahnke pointed out, however, that no risk or insurance manager should rely upon only one friend to help do their job. “It really is about having a good network with all other experts within the group. Some people say that risk managers should have no friends so that they can retain their independence and ability to say no when needed, but the reality is that you do need friends and allies within the organisation,” he explained. Antje Mertens, head of Eberspächer Insurance Services GmbH – the insurance arm of the leading supplier of exhaust technology, vehicle heaters and bus and auto air conditioning systems – agreed with Mr Mahnke. She said that other key central functions such as compliance and internal audit are fundamentally involved in management of risk. “Compliance and internal audit are not excluded from corporate risk management. Far from it. These departments are also part of the network and especially internal audit might assist in the determination of the essential risks,” she said. Ms Mertens also pointed out that to maintain meaningful and positive relationships with all these different functions, it is vital for risk managers to prove their worth. “You basically need to sell yourself and what you do as valuable and interesting,” she said. Mr Mahnke agreed with his fellow board member that risk managers need to constantly show their relevance. But he added that while many risk managers work in isolation or in small groups, they occupy a unique position that offers huge value to colleagues. “You may be a small group, but you talk to everyone and see everything in the organisation and this is a rare and valuable position to be in,” said Mr Mahnke. Matthias Beck, head of insurance and risk management at Adolf Würth group, agreed that the risk and insurance management profession needs to continue working on its image. “There needs to be more people who want to see you without crying,” he joked with a serious undertone. “Insurance is not regarded as sexy as we all know, but we also all know that it can, and does, play a critical and positive role adding important value. We need to bring insurance and risk management into the light,” he said. Ms Mehrtens said the fact that she and others had recently been given the combined role of risk and insurance management is proof the message is being received and understood in increasing numbers of companies. If the wider company and management understand the link between insurance and risk management, that means the real value of both disciplines is appreciated, she noted. Joerg Henne, CEO of GVNW, pointed out that any decision on whether to combine the insurance-buying and risk manager role usually depends on the size of the company. “Often the individual who does both roles works for a smaller company. Bigger, listed companies are required to have formal risk reporting. Of course, risk management is still not a formally-defined term; companies see it very differently and it is therefore organised in many different ways,” he pointed out. Mr Mahnke said that while it may be frustrating that there is no single formal definition of risk management, the fact is that different approaches suit different types of companies. “One solution does not fit all companies. It really depends what the company does, how it is organised and what risks need to be managed. Depending on the circumstances, a company may decide to combine the roles in one, or not, like most big companies,” he said.

Enterprise-wide risks demand an enterprise-wide network of friends

Want to read this article?

Read Next

Climate change to cause ‘massive economic damage’

Energy insurer Paratus launches brokerage division

WTW names Dussuyer to lead operations in France

Allianz names global head of marine

European bosses say half of supply chain will not comply with CSDDD

Climate change to cause ‘massive economic damage’

Energy insurer Paratus launches brokerage division

WTW names Dussuyer to lead operations in France

Allianz names global head of marine

European bosses say half of supply chain will not comply with CSDDD

Want to read this article?

Read Next

Climate change to cause ‘massive economic damage’

Energy insurer Paratus launches brokerage division

WTW names Dussuyer to lead operations in France

Allianz names global head of marine

European bosses say half of supply chain will not comply with CSDDD

Related Articles