BIRMINGHAM, England – Risk managers must ensure that they confidently can articulate to their boards where their companies' top risks lie at times when those boards may be distracted by headline-grabbing issues elsewhere, according to a panel debate Monday at Airmic Ltd.'s annual conference.
And while the fundamental risks that face an organization may not change greatly over time, the variables that affect those risks may vary greatly in importance at different times, experts said.
The experts were speaking during a debate at the risk management group's conference in Birmingham, England, on whether it is risk or the perception of risk that is changing.
During a debate facilitated by Willis Group Holdings P.L.C., Lisa Connolly, senior operational risk manager in the global restructuring department at The Royal Bank of Scotland P.L.C. in Edinburgh, said risk managers must ensure they are in a solid position to be able to demonstrate how risks are prioritized in order to make sure that those key risks are not neglected if a seemingly “new” risk emerges and captures management attention.
“As risk managers, we need to be clear about good resource allocation and not be blown off course by the latest trends in risk,” said Geoff Taylor, a global client advocate at Willis and a former risk manager and past chairman of London-based Airmic.
Risk managers must be able to stand up to their boards and justify why decisions have been made about the priority given to certain risks, he said.
Risk managers need to take control of their own destiny, said Ms. Connolly, and be able to put things into context for their boards.
“Risks don't essentially change, but the scale of them and the immediacy might change,” said Mr. Taylor.
The variables that can affect the severity of risks to an organization do change, noted Ms. Connolly.
For example, she said, technology risk has been a key risk for companies for many years, but cyber risk is a newer variable.
And while most industries have been subject to regulatory risks for many years, one consequence of the recent financial crisis on financial services firms was to increase the scrutiny given to people's behavior and how companies monitor that conduct, she noted.
“Great risk leaders can play a pivotal role,” said Seamus O'Farrell, a director at Richmond, England-based consultancy Forward Thinking Inc.