As we started 2015, our thoughts turned towards New Year resolutions.
One of my resolutions is to keep up to date with my reading – which will have the added value in the future years of contributing to my continuing professional development needs as a Certified Risk Manager. (Look out for an in-depth report about Certification in a coming FERMA Newsletter).
My thinking about managing risk is informed by a number of excellent reports, especially by the FERMA European Risk and Insurance Report and the annual World Economic Forum Global Risks Report.
I found it interesting to see that risks associated with the global financial crisis have moved down the list of risk priorities in the 2015 Global Risks Report, published in January. While they are still there, other serious matters have now eclipsed them.
The report canvasses the knowledge of more than 900 experts and decision makers from across the globe to assess, in its own words, “the perceived impact and likelihood of 28 prevalent global risks over a 10-year time frame”. It says that the most pressing threat to the stability of our world in the next 10 years comes from the risk of international conflict. The consequences of interstate conflicts are also likely to lead to severe water crises across the planet, and the report concludes that environmental risks are far graver than any economic ones.
Never have the three themes of my term in office as FERMA President – Our Profession, Innovation and Diversity – been more relevant. If we are to become risk leaders and support top management in their role of managing risk, as risk professionals we must find practical and innovative ways to help them fulfil this responsibility in such a challenging world as part of business strategy and management.
These risks can emerge and change at speed, and some more “traditional” approaches to developing and using risk registers can be too slow to trigger a reaction. The modern organisation must be adaptable and responsive using risk radars supported by horizon scanning and scenario modelling.
Horizon scanning and scenario modelling demand specific knowledge and skills. To what extent risk managers need to master and use their complexities is a question of judgement – a facilitated round-table discussion with the “right” people can be very effective. These techniques belong in the modern risk professional’s tool kit. FERMA recognises this and will feature both in future papers and at our Venice Forum in October.