Ignore people risk at your peril – Schwager

Mr Schwager gave a fascinating presentation about the development of a holistic approach to risk management during the Multaqa risk and insurance event in Doha, Qatar this week that was hosted by the Qatar Financial Centre Authority in association with Global Re. The CRO pointed out that organisational risks increase dramatically as companies grow, become more international and complex. For this reason the focus of the risk manager really needs to be upon risk culture and above all avoiding the emergence of silo and interface risks that can cause big damage. "Top managers often think that everything is under control. For example if you are running an insurance company you trust that risks have been underwritten properly, counterparty risk is under control, that you have asset management risk managed and so on. But suddenly you are hit by one risk that was not on the radar. When you research the causes of the problem you find that one bit of information was not passed from left to right," said Mr Schwager, who also took part in an interview for Commercial Risk Europe's Global Risk Frontiers survey before his speech.hide"Why would this be the case? Human behaviour, the business can be too complex, silos can emerge and these can provide losses that could be avoided if information management worked better. Knowing this can be painful. Managers often do not know what others know and therefore may not even be aware of the threat," continued Mr Schwager. The CRO said that in his view insufficient management of 'interface' risk is one of the top risks faced by modern international businesses such as EADS. "Perhaps the safety guys forget to pass on information to the engineering department and then they pass the information to the sales people and later you are stuck with a bloody problem that could have been avoided!" said Mr Schwager. One of the reasons why this area needs such attention is because it is inevitable as organisations become more complex, carry out mergers and acquisitions, adopt new technologies and enter new markets and countries. "As a result of this, organisations become more complex and silos are generated which is a risk in itself. You have to treat silos very carefully," said Mr Schwager. The CRO also warned about the risks of oversimplification. If this happens then risks can perhaps not be properly monitored and controls may fail. Also Mr Schwager said that it is important to remember that human nature does not actually embrace risk management. "It is easy to fall into the trap of only looking at information we like to look at and not what we don't like to look at or listen to. Risk management is not a natural thing to do. Life is too short to always look at risks. We would rather look forward to the future. But it is important to learn the lessons because effective risk management may mitigate future problems," said Mr Schwager. - A full interview on holistic risk management with Mr Schwager will be included in the European part of the Global Risk Frontiers survey planned in the next two issues of CRE.

Ignore people risk at your peril – Schwager

Want to read this article?

Read Next

Ferma members told AI will bring risk and reward for corporate insurance buyers

Warmer climate spreading risk of malaria and dengue to new regions

UN launches new net-zero insurance forum to replace NZIA

Pen extends fleet capacity deal with Zurich in Republic of Ireland

Mapfre Global Risks boosts profit by 58% despite reduced premiums

Ferma members told AI will bring risk and reward for corporate insurance buyers

Warmer climate spreading risk of malaria and dengue to new regions

UN launches new net-zero insurance forum to replace NZIA

Pen extends fleet capacity deal with Zurich in Republic of Ireland

Mapfre Global Risks boosts profit by 58% despite reduced premiums

Want to read this article?

Read Next

Ferma members told AI will bring risk and reward for corporate insurance buyers

Warmer climate spreading risk of malaria and dengue to new regions

UN launches new net-zero insurance forum to replace NZIA

Pen extends fleet capacity deal with Zurich in Republic of Ireland

Mapfre Global Risks boosts profit by 58% despite reduced premiums

Related Articles