Risk management rising up the corporate agenda in Italy

Commercial Risk hosted a roundtable with leading members of Italian risk and insurance management association Anra in Milan for this year’s Risk Frontiers Europe project sponsored by HDI Global and Charles Taylor. They said Italian risk managers are benefiting from a higher profile as senior management wakes up to the real value that structured risk management can bring at a time of heightened systemic risk. But more work is needed to truly embed the risk culture. Risk management has certainly risen up the corporate agenda in Italy in recent times driven by both internal and external factors. A heightened awareness of the need for greater corporate resilience, driven by the Covid-19 pandemic and subsequent economic and financial turmoil caused by war in Ukraine, has given Italian risk and insurance managers a higher profile within their organisations. At the same time, the regulatory and legal landscape following the drive towards net zero and wider ESG agenda is forcing Italian companies to upgrade their risk management approach and reporting. Carlo Cosimi, head of group risk and insurance at Italian multinational engineering group MAIRE and president of Anra, pointed to a joint survey the association carried out with consulting firm Protiviti earlier this year that found the risk profession is making strides forward on the back of recent events. “The survey shows a clear picture of professional evolution; there is rising visibility and importance attached to risk and opportunity management within all organisations. This has been driven by the times we lived in with the pandemic and wider systemic risks. It is impossible to tackle such risks without a formal risk management system. There is also a new context and business model. Risk managers need to be in the ESG process, which is an important development,” he said. The evolution of MAIRE in recent times is a good example of this changing business model, with risk and opportunity management now at its heart. The formerly traditional engineering group is now focused on developing and offering new solutions for the energy transition, green chemistry, waste to energy, hydrogen and many other technological processes based on decarbonisation. Paola Radaelli, Anra vice president and senior risk management consultant at Strategica Risk Consulting, stressed the positive elements of this economic transition for risk managers. “The environment is changing deeply and very quickly, and it is not just affecting risk management but the whole organisation. Risks are becoming more and more important and it is vital that risk managers anticipate them to gain competitive advantage. This is a role that the risk manager can play looking at the opportunity and not just the problem,” she said. Annamaria Oliva, chief risk officer at aerospace, defence and security multinational Leonardo International S.p.A, and an Anra board member, also sees a rapid evolution in the profession. “Risk management has changed a lot in the last seven to ten years. All departments and functions within the company are affected because they have to face all the risks. It is very important to formulate and implement a risk management process at two levels – operational and strategic,” she said. Oliva added that it is also critical to remember that risk managers report to all stakeholders and not just risk owners. “Our main goal is to mitigate the risk. Most risks can’t be stopped but they can at least be reduced. This has become more important than ever because over the last five to six years external and international risks have become so much more intensive,” she said. Gabriella Fraire, insurance manager at the energy and telecoms cable systems firm Prysmian group, and another vice president of Anra, said that risk management is being driven up the agenda by a combination of internal needs and external pressures. She noted that, while progress is certainly being made, some risk managers are still ticking boxes. “I would say its half internal and half external. The process of producing documents for the regulators is forcing a change as they are shared with wider stakeholders. But companies need integrated risk management and not all are doing this. Some good companies do it properly but others are just ticking boxes. There is further progress to be made,” she said. Valentina Paduano, Anra board member, chief risk and compliance officer at digital healthcare group Dedalus, and chair of Ferma’s Sustainability Committee, agreed that regulations play a role. But she stressed that senior management is waking up to the real value of risk management and said that the recent focus on ESG is a positive factor. “The board is more concerned with risk management than ever before. I don’t think the role of the risk manager has changed at all. But the perception of what risk management does has changed and the scope of what we do is changing too. It is expanding and the discussion about ESG is part of that,” she said. Marco Terzago, Anra board member and head of risk control for SKF Group, the world's largest bearing manufacturer, agreed that the rise of ESG and need for the green transition is pushing risk management forwards as companies adapt their business models to the new conditions. “There is a global transition underway to be both green and digital. Our focus is to be intelligent and clean. This is not necessarily new, nevertheless, it is a big move for all companies to take the green transition and commit to net zero objectives. It’s all part of the E in ESG,” he said. “The intelligent part means that we have to be very smart in the way we use technology to reduce costs, being more agile. That is a digital challenge. In this context what are the top three corporate risks? First top risk is not being able to deliver on the corporate ESG strategy. All organisations need to be more intelligent and clean but this is not simple. Look at the shift to electric vehicles (EV) in the automotive sector. This is not an easy transition to manage since it has much wider implications than you may think of. For instance, EVs use one third of the bearings that are used in an internal combustion engine driven vehicle. So, this is a big transitional challenge for us all,” added Terzago. “Cyber is certainly another top risk that is driving the need for a more robust risk management on an enterprise-wide basis, and it is closely linked to the digital transition,” he said. “Even companies that are not highly targeted by cyber criminals face big and multidimensional cyber risk exposures – which may arise from IT, OT, production, demand – and of course this risk is heightened by GDPR in Europe. Finally, supply chain risks and the pandemic have surely increased the awareness of senior management to top level,” continued Terzago. The rise in risk levels and intensity – whether pandemic, natural catastrophe or cyber – is clearly raising serious risk-based questions in Italian boardrooms as elsewhere in Europe. It is obviously not a good thing that Italian firms face a risker operating environment than in the past. But, as evidenced by this roundtable and others held across Europe for this year’s survey, it is clear that the positive side-effect of this riskier environment is an appreciation of the need for a more focused and structured approach to risk management than ever before. Anra needs to use this headwind to continue its excellent progress over recent times and further sell the value of the risk profession at both corporate and governmental levels.

Risk management rising up the corporate agenda in Italy

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