Crawford launches On the FrontLine to offer a unique perspective on risk management
Clive Clarke Group insurance manager, Lloyd’s Register and deputy chair of Airmic
HOW SHOULD RISK MANAGEMENT ADAPT TO AN INCREASINGLY GLOBAL AND INTERCONNECTED WORLD AND WHAT LIES ON THE HORIZON?
Is risk management changing and what new challenges does the world today present?
It certainly is and for me, it’s about technology and the speed of change. I saw a slide recently illustrating the speed of the industrial revolution. It showed me that the jump we’ve
made from the introduction of the internet in the late 1960s to today’s highly interconnected world is so much quicker than anything that’s come before.
The speed of change, interconnectivity and the ability to do, see and hear everything in the “here and now” is a real risk concern. The rise of social media means a company’s reputation can be irretrievably harmed, even for something they’re not responsible for, in such a short space of time. These are major issues for risk managers to grapple with.
Risk and opportunity are intrinsically interlinked. Tell me about this…
Risk and opportunity are very much intertwined. Take the mass migration of people into Europe. For some this poses the threat of destabilising the relative status quo, while for others it’s an opportunity given the different skills, thinking and cultures these people bring.
People and succession planning in general are both a big risk and an opportunity depending on your view and your ability to adjust. Take for example the millennial generation. They want to work differently and don’t necessarily want to work from 9 to 5 – and companies are trying to accommodate this. At the same time, the older generation are living longer, aren’t required to retire at
a set age and have a wealth of experience. Successful businesses will find a way of keeping the whole range of their workforce engaged and happy.
Future gazing is increasingly important for any major global organisation. Looking ahead what do you think will be at the top of the risk agenda over the next decade?
Future gazing is often about considering the here and now. Cyber is a “here and now” issue but it will continue to morph and cause disruption to businesses well into the next decade. While
climate change isn’t yet on everyone’s mind all the time, we’ve already seen the impact of milder winters and wetter summers, and this will become a bigger issue in the future.
We’re also seeing pandemics that are difficult to control or mutate, such as SARS, bird flu, swine flu and more recently with Ebola and the Zika virus. An Ebola virus outbreak in a Western city could kill millions and cause widespread panic. These are some of the things risk managers need to plan for.
The majority of resources, time and money, of course, is spent on the here and now. I’m not sure there’s huge appetite to future gaze. Senior executives typically look at a three to five-year time horizon, so risk managers need to focus on that too. An Ebola outbreak in London, while potentially devastating, is extremely unlikely. Risk managers must focus on relevant risks. You’ve got to give 95% of your time to the here and now, while also continuing to future gaze so those risks don’t fall off the radar.
It’s also true that risk management reacts to events in the recent past. Nobody foresaw the impact from the erupting volcano in Iceland in 2010 on European airspace… but suddenly it was on everyone’s agenda. Now it has dropped off again and nothing has changed of course – the volcano is still there. People are more aware of black swan events, but I still don’t think we’re particularly good at capturing that kind of information.