Risk management suffering from identity crisis says IRM panel

A panel member also said that risk was under-prioritised at board level and called on the role of chief risk officer to be held in as high esteem as chief financial officer. Debate raged as to the exact role the risk manager should play within an organisation. One expert suggested that a clear difference between the risk and audit function should be the provision of solutions to problems. This divided opinion amongst the audience and highlights the confusion over where risk managers need to go and how they should get there. Martin Fessey, vice president, market and business development at FM Global’s EMEA/Asia Pacific office said he feels that the risk management profession is struggling to understand where it fits within an organisation.hide“It suggests to me that risk management has an identity crisis in terms of what it is and where it is at—is it financial risk, is it operational risk and that confuses people,” he said. When the audience was asked if it shared such concerns, the majority, around 80%, raised their hands. Richard Anderson of Richard Anderson Associates and deputy chairman of the IRM, argued that the risk function is not as high on boards’ agendas as it should be: particularly in comparison with the finance function. “I look forward to the day when people do not suggest that the chief executive officer and chief financial officer are the two main executive members of the board, but rather the chief executive officer and chief risk officer,” he said. “My overwhelming sensation is that risk is under-prioritised at board level…we have to make sure businesses develop a much stronger sense of their risk management and insurance framework and that we are able to stand toe to toe with the red blooded, testosterone-charged chief executive.” James Portelli, executive vice president and head of strategy and planning at the Oman Insurance Company, agreed with others on the panel that the role of the risk manager is to some degree blurred. But he was clear that they must supply solutions to problems, which should distinguish the profession from the auditor’s role. “Why run the mile and not get to the finishing line,” he said. “Risk managers have to supply solutions and not just fight the fires.” Around half of the audience agreed with Mr Portelli. There was some debate as to whether the risk management function needs to lead from the front, in a top down manner, or deliver from the bottom up. “Leadership from the front is all well and good but sometimes this forgets the day in day out problems of dealing with risk in the field. Bringing those two together using appropriate matrix and key performance indicators is, I suggest, where risk management needs to be,” said FM Global’s Mr Fessey. “I would suggest risk management needs to be a leadership position from within and from behind rather than from the front,” he added. The recent CRE risk management survey found that this approach to risk management does have its supporters. Particularly in central Europe in countries such as Germany, Holland and Switzerland where risk managers tend to be more insurance-focused. The panel agreed that the profession needs to move away from the tick box approach, which grew out of the Turnball report. They also said that risk management needs to be more strategically aligned to business decisions and more relevant to the board.

Risk management suffering from identity crisis says IRM panel

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