Raising the bar–UK

The financial and economic crisis in recent years has without doubt given the risk management profession the boost it needed to raise its profile and be more truly appreciated and valued in the boardroom. In the eyes of some leading risk managers it also exposes some shortcomings and inconsistencies in the way the profession is organised and educated that need to be sorted out sooner rather than later. Paul Taylor, Director of Risk Assurance and immediate past chairman of Airmic spent much of his year in charge at the association trying to work out exactly how the profession can grasp the opportunity that lies before it. “It is getting better but there is still an awful lot of box-ticking and more compliance. This is not always the case and some boards are very good at it but talking to fellow risk managers I get the impression that we still have a fairly long way to go to establish risk management as part of the strategic planning process. It is not embedded yet,” he said.hideMr Taylor said that one of the interesting things is that at board/executive level, directors like to look at opportunities and projects but they don’t necessarily like to quantify the risks involved so much. “This is quite interesting. If I were in a position to identify an opportunity and was putting numbers to it why not also quantify the downside and what could knock it off course? The question is what level of risk is acceptable or unacceptable. There is the whole aspect of risk appetite within the UK Combined Code and Turnbull. To define risk appetite is supposed to be a key element of Turnbull and the Code but I don’t see many companies that have done this, but this may be just a gut feeling. In some companies, the board really understands the value of risk management to their business, but this is not yet universal,” he continued. Mr Taylor does not think that this has been caused by a lack of formal, universally used industry-wide standards for risk managers. In his view the inconsistency of valuation of risk management at board level is more related to the culture of organisations and the level of board understanding in each individual company. The big question is obviously how to change this and find out what would give the impetus for the final arrival of risk management at board level. Mr Taylor said that, in his view, the answer partly lies in education and particularly for non executive directors. “They need to really understand risk management and get it. One of the problems is that these people are very busy and so need clear, simple presentations and the right kind of information to absorb. The book that Airmic has just published with the Institute of Directors is a starting point. To learn something new, most people need some training. And of course companies should have people on the board who have risk management knowledge, if not risk managers themselves,” he said. Mr Taylor said that Airmic is doing many things currently in different areas to tackle this area and one of the key things that he focused on in his year as Airmic chairman was a vision to understand where Airmic is going and why. “The first part is the development of the current membership. A key part of this is Airmic Academy, the training body created and led by David Gamble, the former CEO of the association, as well as through a mentoring programme and the production of guides. The academy is fast becoming the core of this strategy but we also needed a much more long-term plan with a 10-year view,” he said. The second element, according to Mr Taylor, is the need for professional recognition. “Other professionals such as chartered accountants, lawyers and company secretaries all have recognised standards and qualifications but the risk manager does not even have a globally recognised definition. We recognise some of our own professional education like IRM, CII, but few others do outside of our discipline and so for us the challenge is to build up recognition and credibility of the profession in the wider business world,” he said. Airmic is therefore working to obtain professional recognition which is part of that effort, said Mr Taylor. “There are many parts to the profession. The engineering profession is an interesting analogy: You could become a chartered mechanical, civil, electrical, chemical engineer, all having chartered status but in different engineering disciplines. It is the same in risk management, you have experts in financial services and banking, treasury, insurable risk, health and safety, legal and so on,” he said. Mr Taylor said that he recognises that the association cannot address all of these at once and does not have the critical mass to do so. It is therefore working with others such as the Chartered Insurance Institute with which it could develop the first level of chartered risk manager. “This is a huge hurdle in itself if only because other chartered professionals such as the Institute of Internal Auditors or chartered accountants may want to be involved. This is all about breaking through the glass ceiling which also involves wider media coverage in the wider business press. The key is to work out how to fit risk management into the wider and longer-term strategy. It is no good enjoying a moment of popularity because of the crisis and then finding we are pushed back into the shadows. This is why we need the long-term vision and the rolling 10-year horizon,” he said. Nicholas Bailey, new Chairman of Airmic and Risk Manager for BBA Aviation, said that one key objective for his year at the helm of the association is to enhance the learning and development offerings for the membership. He pointed out that Airmic already provides ‘quality’ technical resource and guidance through Paul Hopkin, Technical Director, and the technical publications. He said The Academy led by David Gamble is ‘ever more popular’ and will continue to develop these areas. The conference is a tremendous learning and networking opportunity, he added. “We plan to enhance these and make progress in other areas such as the professional recognition for the membership, for example through a Chartered qualification, career development opportunities, softer workplace skills that allow members to better interact with their senior management. These improvements will I trust enable the risk manager to better demonstrate their value to business,” continued Mr Bailey. And, just as AMRAE is reaching out to smaller companies in France to help them embrace risk management, so Airmic has a similar objective. “An effort to spread good practice and awareness through the technical agenda and Airmic’s work with other bodies such as the CBI, ACT and IOD will help enhance risk awareness and the value of the profession more generally,” said Mr Bailey.

Raising the bar–UK

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