Management and leadership key friends for risk managers

It is vital for risk managers to be best friends – or have good relationships with – many individuals and departments to succeed, but the most important relationship of all is with management, said those taking part in the Nordic leg of our European Risk Frontiers survey. Other important contacts are risk owners or controllers, strategy and internal audit, the group of leading risk managers added. Asked who should be the risk manager’s best friend in an organisation to help get the job done, Lennart Edström, vice-president of group risk management at AB Electrolux, said: “I’d like to put an ‘s’ on that – you need best friends.” But like most of his fellow Nordic risk managers, the Swede stressed the importance of having leadership on side. “They need to be your friends, or at least need to know what you are doing and the value of what you are doing. The whole leadership team needs to be aware of the risk management function. To me, that is crucial. Some companies hardly know about the risk management function, while others are very well aware. In my company, we even have a risk management board where we have access to the leadership team,” said Mr Edström. Anders Esbjörnsson, director of group insurance at construction firm NCC Group, agreed it is crucial to be close to management, and especially your boss. If that relationship does not exist, it tends not to matter how good friends you are with other people in the organisation, he continued. Mr Esbjörnsson said risk managers must be aligned with their boss and have a common understanding of the role, challenges and where you are going. “I have seen it happen a number of times where people try to drive an agenda that is not totally in line with the expectations of their manager, and this makes things extremely difficult,” he added. Melinda Johansen, general manager of group risk management at Denmark-based engineering group FLSmidth & Co, said, in general, executive-level management should be risk managers’ best friends. If you don’t have their buy in and support, the behaviour and attitude you desire will not flow down through the organisation, she said. Gaining their attention requires several steps, the Dane added. “I think when you present risk information to them in the right way and show them that results are very much dependent on how seriously or not risk management is taken at that level, it can get their interest. I think open and direct, but still professional, communication is necessary, but it must be backed up by evidence,” said Ms Johansen. But the risk managers agreed it is important to have friends across the business. “From the leadership level, I would like to move down the organisation a bit. I would like to see the controllers at all business levels – factory level, sales level and division level – be my friends. They can pick up what is going on. They can spot inconsistencies that I can’t. So they need to be aware of you and know where to call if they have a question,” said Mr Edström. “We are trying to elbow our way in on all the controllers’ meetings to make presentations about what we are doing and why we are doing it. They are concerned about figures. So if I can tell them that we have business interruption insurance to protect them, they start listening because they hate deviations,” he continued. Mr Edström also believes it is important for risk managers in the manufacturing sector to have production heads as friends. “To cover and reduce losses in the production area, we need their ears too. So we need friends at the top level, controlling functions and from the production area. But of course this is not always easy to achieve,” he said. Like many of his fellow European Risk Frontiers participants, Mr Esbjörnsson stressed the importance of being good friends with business area managers and managers of group functions that control the risks. “At all times you need to be aligned and have good cooperation or friendship with those responsible for the risks where they occur,” he said. Alexander Hansén, group insurance manager at multinational retail firm H & M Hennes & Mauritz AB, said it is important to be on good terms with everyone across the business, given the nature of risk management. “Risks can be found everywhere, both on the floor and at senior management level. So keep your eyes and ears open and always try to expand your internal network at all levels,” the Swede advised. Fellow survey participant Tapio Huovinen, director of risk management at renewable wood biomass company UPM, said risk managers should have many best friends, but exactly who depends on the responsibilities of the risk manager. For Mr Huovinen, and others with ERM responsibilities, best friends on a daily basis should be those in the strategy department and risk champions in the various business areas, he explained. “You need support from top management too, but they are not in the loop daily or even monthly. For me, relationships with the other assurance partners, such as internal audit, are also very important because we need to share knowledge about what each of us is doing. For other risk managers, there are other specialist areas such as IT security that need to be close. On insurable risk it is different partners – business controllers that can provide information on insurable values and manufacturing locations,” said Mr Huovinen.

Management and leadership key friends for risk managers

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