Current affairs
corporations are siloed by function, and reinsurers by product class. Insurance is one aspect of risk mitigation, he stated, and opportunity ‘is as important’ as risk, with both ‘integral’ to strategy. Connected risk is a ‘systemic exposure of
organisations, partners, suppliers and customers to cumulative and cascading financial operational and reputational vulnerabilities’. With digitalisation ‘changing the nature’ of products, services and relationships ‘on an unprecedented scale’, it should be seen as an opportunity. In a more connected world, businesses should see this as a strategy. Mr Kirkman-Page shared the company’s vision of a risk landscape across a business’s operational plan, with an insurance department ‘best placed to understand’ the ability to see underlying networks and understand opportunities from an outside in perspective. Risk management tools, suppliers and trading partners can be schemed in, alongside ‘anyone involved in production’, since reliance is needed ‘down the chain’. A ‘broader vision’ is required, as a cyber attack
could hit ‘really far down’ in a complex supply network that affects businesses, though the ‘phenomenal’ amount of data is hard to parse. However, third party providers can pull together and manipulate it into three dimensional models of organisational risks and opportunities, showing how risks connect and potential impacts. By ‘observing the white space’ in a network map and analysing scenarios, Mr Basi noted that this would extend globally, while Mr Kirkman-Page added that while most companies focus on opportunities and risk, chief risk officers ‘need to demonstrate the positive value add’ of mapping. It can ‘be hard to move away from an inside only or inside out risk perspective’ without a data model showing an outside in view, Mr Basi said, adding that it is their intention to ‘map out nodes’ for network analysis. He doubted that it would look at component levels, because it was important to start with engagement and ‘trying to build a hierarchy of connections’. As products and services change quickly in
the digital world, a risk landscape and framework of internal and external risk and opportunities allows companies to ‘get a better handle on’ external risks they can often miss. Delegates then accessed an app on which they could vote for which external risk most affected their business.Of reputation, cyber, supply chain, natural catastrophe and geopolitical risks, the first was voted top, Mr Kirkman-Page surmising this was because ‘all others influence’ it. Reputation depends on outcomes of other risks, and both men noted that it was difficult to mitigate, brand damage covered in some but not all risk planning. Another question asked which risk was most impacted by strategy, with reputation
FOCUS
again first, and the question arose whether this came from the culture of the market or vice versa. Asked which risks they ‘didn’t have a handle on’, most selected cyber followed by geopolitical. On the mooted framework, Mr Basi stated that it aims to tackle the ‘disconnect within larger companies’, make them more connected, and ‘empower the risk manager to better understand internal and external organisational risks and opportunities’. Risk managers should be influencing business strategy as they ‘add demonstrable value and make risk relevant’. Russell Group has working groups in multiple
sectors, and its solution is aimed at the board level, with the ultimate aim to integrate vendor data, alongside asset tolerance and appetites to create a ‘universe database’ for decision makers, who can take the information and build a strategy.
Construction risks wokshop
HDI Global SE’s Mark Allan presented key elements of construction risk management for successful projects as being project development and scoping, identifying risk and allocating ownership. Differentiating between risk management and management of risk, he highlighted examples of successful projects: Heathrow Terminal 5 delivered on time and to budget and with an exemplary safety record, the London Stadium built in economically straitened times, and the Channel rail link. But it’s not all about delivery by the contractors: problems resulting from customer procurement
www.frmjournal.com OCTOBER 2018 49
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