Dancing to a different tune

A changing mindset is required of risk managers of the future as they have to adapt to a fast moving environment in which the challenges fly thick and fast. Relying on history for likely behaviours is not necessarily going to help in a world of political, economic and individual upheaval. Risk managers at the recent Institute of Risk Management South Africa’s annual conference in Johannesburg heard this is a time, like none before it, to keep nimble and alive to a changing and challenging environment, as Liz Booth reports The challenges facing organisations fail to get any easier as the South African economy continues to provide a difficult backdrop. However, as both delegates and speakers at the recent Institute of Risk Management South Africa (IRMSA) annual conference stressed, the role of risk managers has never been more crucial and the opportunity to add value has never been greater. At the Johannesburg event, which attracted around 400 delegates, risk managers spoke of myriad challenges including the arrival of disruptive technology, a changing regulatory framework and the state of the wider market. Spiros Fatouros, CEO of Marsh South Africa, told delegates in a keynote speech that they must adopt a new way of thinking in terms of the changing technology around them and how it might both help and hinder developments. He gave the example of driverless cars. It may be a huge advantage for many to use a driverless vehicle, however there are some moral dilemmas which only humans can evaluate. For example, he said, if the vehicle is travelling down the road and there is a pedestrian in the middle of the road – how does the car avoid the person without ploughing into the pavement where there are yet more pedestrians? “Artificial intelligence will create new risks,” he suggested, “How do we manage that within our existing contracts, for example? Going back to the driverless cars example – whose liability does it become?” He also warned of the huge increase in cyber risks. Just a few years ago, he argues, few companies were worried about cyber threats but now there are virtually no sectors that can afford to ignore the risk. The idea of flexibility and a nimble approach to risk management echoed through the two days of the conference. Mr Fatouros stressed that “understanding risk management in the current environment is key” but it is also essential risk management flows into strategic decision-making too. “As disruptive technology changes business models, risk management should actively engage key stakeholders,” he suggested. Investing in the collection and use of data will be crucial in the year ahead and Mr Fatouros suggests risk managers use cyber risk as a wedge issue to draw in senior executives and the risk management team into the same discussions. “There is no doubt,” he said, “that artificial intelligence is changing the world we know at a massive speed. However the fundamental principles of being able to add value to your organisation and providing customer service will never go away no matter how the technology changes.” There is, and should be, a key role for risk managers to play in every organisation but Mr Fatouros stressed it will be up to risk managers to prove their worth to their board and to the wider workforces. Linda Jaka, head of OR framework and governance, Standard Bank, took the conversation to the banking sector and discussed the reality of systemic risk. The interconnectedness of risks cannot be ignored, she stressed, and all risk managers should be keeping a weather eye on the banking system. Without a reliable and sustainable banking sector, she argued, organisations will not be able to function to their fullest potential. Like Mr Fatouros, Ms Jaka spoke about the challenges and opportunities presented by any one element. For example, she explained, the use of data gives many banks their competitive edge in selling to customers and making the most of their opportunities. However, because it does provide that competitive advantage, banks have a tendency to hang on to the data, refusing to share with others. This, in turn, creates a risk that each and every organisation has to go through the same learning curve and potential systemic risk – something that could be avoided by a little sharing. She also warned against adopting a “one cure, cures all” mindset. Systems and proceedures that work well in one place may well not work at all well in another, and risk managers need to be mindful of ensuring they adapt the best risk management practise to fit their own organisation. Ms Jaka also suggested that risk managers should have a more open mind when it comes to fines and penalties. While no one wants to pay a fine and everyone moans about the cost and time spent on compliance, she urges risk managers to take a positive approach. Everyone faces those same compliance challenges, she said, adding, “imagine a world without speed cameras on the road”, in which all drivers acted like they had the right of way over anyone else.

Dancing to a different tune

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