The role of risk management is to help organisations achieve their objectives in an uncertain world. Firms everywhere are obliged to report on the principal risks to their business, and what they are doing to mitigate them.
In 2020 the world has been turned upside down as a long observed, although perhaps insufficiently managed, risk – a global pandemic – has become a massive live issue.
The Institute of Risk Management (IRM), which educates the world’s risk professionals, recently conducted a survey of its global community to find out how the profession viewed the crisis. Nearly 1,000 people, from all sectors and regions of the world, responded.
Please click here to see the report.
Hammering home the importance of the risk function
The survey found that 98 per cent of respondents were still working in their risk roles, indicating that risk was considered a function that could and should be kept going at full strength when organisations come under pressure. Accordingly, 94 per cent of respondents believe that the current pandemic experience strengthens the case for risk management.
Those who have studied or trained with us will be familiar with the principles, tools and techniques of risk management, business continuity and crisis response that can be deployed to help organisations prepare and respond to situations like this.
Hopefully organisations have continuity plans, and these will form the basis of their current responses, but it is quite likely that they did not foresee a situation as widespread, complex and long lasting as we are facing. We are also seeing how well theoretical plans work when faced with real life situations.
Looking forward, it’s quite clear that resilience and strategic risk management are going to be hot topics as firms seek to protect themselves for the future. And it’s hugely important that the current crisis doesn’t obscure the other major risks that we still face, including climate change and cyber-risk.
Why we must get better at handling all risks
We have had a wake-up call that we need to get better at handling risks of all types, and also finding opportunities to drive recovery.
Preparedness is key, effective risk management and business continuity plans now kicking into place will play a pivotal role. And some less risk-mature organisations will be in unchartered territory which will sadly, inevitably, lead to some businesses folding as has been widely reported. Many companies do not survive a moderate-severe global risk event like the COVID-19 virus.
We are now deep in a phase of response and recovery. As risk professionals we are skilled at framing and understanding these difficult policy choices. One of the challenges for risk managers will be to ensure there is a balanced, proportionate and common sense approach.
A core principle of risk management is to learn from experience and improve; there will be lessons from the experiences of dealing with the challenges of COVID-19 which will result in improved resilience and better risk management in the future.
Professional risk management will deliver the resilience that organisations will need to emerge and recover from the pandemic crisis. The role of the risk manager has never been more important.
Iain Wright, CFIRM
Chair of the IRM
