An innovative response is required to cope with fast-changing risk roles

“We fired a gun last year with the publication of our Roads to Revolution report; this year, it will be interesting to see how everyone responds to that call to action and what solutions people are able to bring to the table.

“This is a fast-changing industry and Airmic likes finding solutions rather than bemoaning problems, so I am looking forward to seeing an innovative response this year.”

That is how John Ludlow, chief executive of Airmic, characterises his hopes for the 2019 Airmic conference being held in Harrogate this week (June 3 to 5). He told Airmic Today that he hopes exhibitors, speakers and delegates will all embrace the theme of this year’s event: New World, New Solutions—a theme devised from last year’s report which will examine the impact of the digital revolution on businesses and the role of the risk manager.

Ludlow hopes to see innovative ideas put forward around how companies might better organise their governance risk and new ways of working to better manage things such as cyber and reputational risks.

“It is about developing new ways of working that are more collaborative, taking in external companies and all stakeholders and partners rather than working in isolation,” he said.

He stressed that while technology has caused huge economic development and an increase in the asset value of many companies, that value can also be based on intangible factors and, as such, can be destroyed very quickly.

“We are seeing the lifespan of business models shorten,” he said, noting that social media are one important factor that has changed the balance between shareholders and other stakeholders.

Because of this dynamic, companies must take a more societal view and embed a real corporate purpose into their activities—to attract and keep employees and customers. At the heart of this dynamic are people and, Ludlow believes, “people risk will soon be very much within the domain of risk managers”.

“The nature of risk is changing. It used to be financial risk, regulatory risk, operational risk. Now things such as cyber risk, strategic risks and reputational risks have come to the fore.

“The next domain of this will be people risk: from pensions to welfare to competing for talent, the risk of companies getting this wrong will only increase,” he said.

This mentality is reflected in Airmic’s 2019 agenda, which has large parts dedicated to topics such as wellness and diversity. Ludlow said Airmic wants to lead from the front on corporate social responsibility issues such as diversity, inclusion and community, and the forward-looking agenda is very much influenced by that desire.

“The challenges facing risk managers, especially as globalisation magnifies the challenges facing companies, are more complex than ever with the gap between winners and losers increasingly magnified in truly global sectors in particular,” he said.

“This is not evolution, this is revolution. It is not incremental change—in terms of speed and magnitude, we are now seeing fundamental change,” he said.

Technology has the potential to solve some of these challenges, which means risk managers are being bombarded by insurtech companies looking to sell their wares. Ludlow advises risk managers grappling with this challenge to ensure that any technology operates as a servant to what the business wants to achieve, rather than the other way around.

“Risk managers need to engage with technology and invest time in understanding its potential. It is for this reason we have the Tech Hub at the conference this year—an exhibition area dedicated to technology that will showcase what is possible—and a lot of workshops focused on technology,” he said.

“I want members to become more aware of what is out there and get curious about technology.”

He added that the insurance industry knows it needs to do more to understand the challenges faced by risk managers, and to develop solutions. But the industry can also be guilty of coming up with solutions without fully understanding the problem first.

“Companies must get a better understanding of the value of their intangible assets, so they can consider how to manage them better. I suspect they will already have a building manager but not a reputational manager, but the building will be worth peanuts in comparison to reputation.

“These intangible risks need managing but insurers need to push back a bit and insist that companies understand these assets and risks first before suggesting solutions,” he said.

To cope with these increased demands, he suggested, the risk management profession needs to attract more people with business acumen—not just very technical risk managers or insurance experts, as important as those skills still are.

“Increasingly, they should think like businesspeople first, so they understand the vision and strategy of their company and make decisions in that context,” he concluded.