A Call to Action for Risk Managers

Risk managers are waking up to the fact that as the world continues to change, they must also change. Upgrades to skill sets as well as the overall approach to risk management is essential for these professionals to provide the value that companies are demanding in the tumultuous global economic environment. Just this week, at the Federation of European Risk Management Associations annual conference in Sweden, a call to action is being made to risk managers around the world.  Here’s a sample of the views expressed during the conference as reported by Business Insurance magazine.

During a news conference at FERMA’s forum in Stockholm, FERMA executives said risk managers cannot isolate themselves from the financial turmoil in many parts of the world or the rapid changes in many industries because of technology. “You cannot put your head in the sand; you have to understand and live with it,” said Julia Graham, chief risk officer for London-based law firm DLA Piper U.K. L.L.P. and VP of FERMA.

Ms. Graham said the skills that risk managers need have changed in the past five years. Now, she said, risk managers need to look forward more than backward, have greater financial literacy to understand and talk the language that company boards use, and improve their management skills, among other things.

The purely quantitative, historical view of risk is no longer adequate in today’s complex global marketplace.  Strong business acumen is required for risk managers to provide a better view of potential risks and opportunities facing companies today.

Understanding the 2011 Top Global Risks

Earlier this year, the World Economic Forum established a Risk Response Network (“RRN”) to facilitate dialogue among global leaders about the most important risks impacting our environment and economy. Kevin Steinberg, Chief Operating Officer, World Economic Forum USA, and Head of the Risk Response Network provided the following thoughts on the goals of the RRN. “Throughout the extreme shocks of recent years, both public and private sector leaders have been struggling to avoid collapse and keep the economy afloat. The World Economic Forum is launching the Risk Response Network: an umbrella of projects and initiatives all designed to help global leaders better understand, prepare for and respond to risk.”

With the launch of this new initiative, the World Economic Forum published a report on the most critical global risks that must be addressed in 2011. This report draws upon a risk perception survey of 580 global leaders, 18 risk analysis workshops and 50 risk expert consultations resulting in an assessment of 37 global risks. The resulting analysis is very intriguing and represents a true opportunity to begin addressing risks in a more proactive manner.