It is always the unexpected that will catch you out. Not the Millennium Bug, not swine flu, but, a volcanic eruption in Iceland, of all things.
Risk managers were made fully aware of this at the recent Institute of Risk Management’s Global Risk Management Professional Development Forum held at Keele University in the U.K.
Out of 24 workshops and presentations, at least six had to be rearranged because the speakers were stuck in the U.S., South Africa, India and Denmark. But, as befits a risk management organisation, the IRM handled the crisis deftly. This again proved that what risk management is all about is not trying to prepare for every eventuality, but ensuring that when the unexpected happens, like an awakening volcano, the risks can be managed with the minimum of fuss and impact.
Ironically, the conference had been moved to April from September to avoid the glut of risk management conferences held in the autumn, and the hangover effect of summer holidays.
It therefore avoided the hurricane season, but, not one of nature’s other great events. Nevertheless, it gave the IRM the chance to show what it called ‘a real life opportunity to demonstrate risk management in action’.
The conference is now branded as a ‘professional development forum’, and describes itself as the ‘premier risk management educational event.’
This is not simply marketing but reflects IRM’s role as an education institute. Indeed, the theme of the conference was ‘Developing yourself as a risk professional’. This was also the first time that the conference included a range of educational development sessions for risk management students, including IRM examination revision workshops.
One of the themes of the conference was the need for risk professionals to engage with the board, to be able to communicate with senior executives, and to be heard. Part of this is about communication skills [see SWERMA conference report], and part is about being respected as professionals.
Andrew Keeling, IRM’s Chairman, and Director, Internal Audit, Risk and Compliance at KPMG, told Commercial Risk Europe that in some organisations, the board recognised the risk manager as a value adding specialist, and that senior executives engaged well with their head of risk.
In others, however, “senior executives take the view that they already manage risk well on a day- to-day basis for their organisation, and cannot see what a risk manager could add, that they weren’t doing already,” he said.
In the past, said Mr Keeling, risk managers were often not seen as able to add commercial value, as they focused on insurable risk, and not on risks that drive profit and opportunity.
“Sometimes they didn’t fully understand the key issues for their companies, or what the board agenda was,” he added. “Risk managers need to become far more commercially aware in understanding the wider business processes, and, importantly, understanding the real strategic issues in the boardroom.”
According to Mr Keeling, risk management is now becoming as specialised a professional discipline as accountancy, tax or treasury. “Risk professionals need to be as competent, qualified and experienced as other specialist business disciplines, and IRM has a role to play in their continued personal development,” he explained.
Mr. Keeling stressed, however, that while business processes may have moved on rapidly and continue to do so, risk management processes have not developed as effectively in many organisations, with some risk systems changing little in the last five years despite significant changes in the organisations’ internal and external environment. “Risk professionals need to continue to personally develop their skills and knowledge to keep up with the pace of change in their businesses,” he said.
Mr. Keeling added that sometimes risk professionals are not so good at understanding other risk areas such as treasury risk or tax risk. “Risk managers need to understand these risks, and need to open up to the broader range of commercial risks affecting their organisation,” he said.
This theme of developing professionalism was taken up by Steve Fowler, IRM’s Chief Executive.
He said that professionalism was vitally important, especially as risk managers need to transmit their message to the highest levels in organisations.
“Competency is a key issue for the IRM and risk management in general,” he said. “If we are to gain the respect we think we deserve, competency, and the professional demonstration of it, is very important.”
As a result, he explained, IRM’s qualification structure is under review: “Not on the technical side, but, in terms of building personal professional competence into the qualifications and training.”
Mr. Fowler also revealed that IRM would soon launch a new qualification in financial services risk management.
This was initially planned for launch two years ago, but was delayed when the financial crisis hit, and it was decided to wait until the key lessons learned from the crisis could be reflected in the qualification. Now, after extensive work with practitioners in the area and building on the experience of the last two years, it is back under development and planned for launch in the autumn.
Despite losing workshop leaders to the flight ban, the IRM used this opportunity to include a timely new session entitled ‘Under the shadow of the volcano,’ to look at the risk implications of the event and led at the last minute by John Stevens, who co-ordinates IRM’s Transport and Logistics Special Interest Group.
And for those who may think this was somewhat after the event, the workshop heard that the volcano in question has a big brother in Iceland, and every time in the last 500 years that the smaller volcano has erupted, the bigger one follows within a matter of monthsÑwith a force 10 times that of the one just witnessed.
Even though the flight ban was lifted on the last day of the conference, the message was be prepared, think about the risk implications, because the next one could be imminent, and so much worse.
The IRM continues to go from strength to strength and now has more than 3,000 members worldwide (from a base of 750 just six years ago). And, it would take more than a volcanic eruption to scupper its first Global Risk Management Professional Development Forum. These are risk managers after all – it’s what they do.