CEOs back Ferma’s call for more strategic role

Risk management needs to shift up a gear to help inform strategic decision making and partner with business leaders to keep their focus on key risks and longer-term issues, agreed the outgoing president of Ferma and CEOs taking part in a panel discussion at the federation’s seminar in Antwerp. The good news from the event, which attracted almost 300 attendees, is that the CEOs are clearly open to more support from risk managers. Opening the session, Dirk Wegener, who hands over the reins of Ferma president this week, said risks are evolving rapidly and risk managers are needed more than ever to help deliver sustainable growth. He said that over the past two years, many risk managers and companies were simply “firefighting” amid “unprecedented circumstances”. “This highlighted to us at Ferma that simply reporting risks is not enough. It is our view that risk management must be seen as a value-added function, which extends beyond the management of operational risks and engages directly with the c-suite to support the broader strategic ambitions of the organisation,” said Wegener. He stressed that risk managers can, and should, play a key role in facilitating sustainable corporate performance and boosting overall competitiveness. “Risk managers can contribute significantly to the decision-making process. The potential interaction points with the strategic agenda are extensive and growing in number,” he said. One area that Ferma considers of particular importance is evolving the risk management function to transition from a risk-centric to an objective-centric approach. “Essentially, this looks to reposition the key responsibilities for risk assessment and reporting, and place equal emphasis on strategy and value creation and preservation. If all stakeholders recognise this business priority then the focus shifts to how partners can facilitate that improved integration of the risk management function into the strategic framework,” said Wegener. “Therefore, the theme of our seminar this year is ‘Roadmap to strategic risk management’. To really show our value added to our companies we need to understand our c-suites perspective and be able to articulate to them the risk function,” he continued. “The world is in transition. In this new era, we are convinced that risk managers can be a true co-pilot with their boards and top management as they navigate the challenges and opportunities,” he added. The CEOs on the panel agreed that they need the support of risk managers to help steer through difficult, strategic decisions. “Risk managers are strategic partners to make sure we take into account key risks and start working on how to prepare,” said AGFA CEO Pascal Juery. He called for “more dynamic” risk management that is embedded within companies and provides the agility to look at different time horizons and perspectives. Juery said CEOs particularly need help from risk managers to balance their time between short-term issues and the longer-term perspective. “Risk managers need to help foster healthy dialogue that ensures business leaders are looking longer term,” he said. Risk managers can help keep “one eye on the microscope and one eye on the telescope”, he continued. And Juery stressed that most of the decisions taken by CEOs are, ultimately, risk based. “Of course, we look at the opportunity side but you know the risk is more important. I used to be a chief purchasing officer and no purchasing managers gets fired for paying a little bit too much but is in trouble if they don’t deliver the goods. So risk management is important when you make these decisions,” added the CEO. Francois Michel, CEO of John Cockerill, agreed that CEOs and boards increasingly want support from risk managers. But he said business leaders need to focus on a maximum of ten top risks, with the help of risk managers. “Risk management is the opposite of compliance when you have to manage all the risks,” he suggested. Juery said his firm decides on key risks through a bottom-up process, helped by the risk manager, who shapes the risk map. There is then a regular session with the executive team to analyse, discuss and prioritise risks. Juery said an executive is then assigned to sponsor each of the biggest risks. “There are decisions at several levels that end with the executive team and then board discussion,” he said. “Where we need to progress is to make sure that risk is a multi-stakeholder process of strategic decisions.”

CEOs back Ferma’s call for more strategic role

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