Why risk management plays a key role in organizational resilience

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2022 promises to be a busy year for Charlotte Hedemark Hancke. In addition to his daily work as A senior risk specialist with the Customer Success Risk Assurance team in SAP’s Global Risk & Assurance Services organization, she is also Vice President of FERMA and Chair of the FERMA Forum Committee, to be held in Copenhagen in October 2022. The theme of the Forum will be “Transitioning Together – Risk Leadership in a Fast Changing Word” which translates the ambition of its members to move forward collectively for successful green and digital transitions, with risk leadership as a strategic compass.

Hancke is also a committee member of the 2022 FERMA Risk and Insurance Survey – the next edition of the biennial survey of the European Federation of Risk Managers. After two years in which risk managers around the world have seen their role take on increased importance in the face of the pandemic, she is interested to see what next year’s survey will reveal when the results are released in May 2022. .

“This will be our 11and edition of the survey,” she says. “The questions are not the same every year, but we try not to change them too much because it’s good to be able to see certain trends.

“We send the survey to all our member associations. It provides a unique insight into the views and roles of risk managers across Europe; we get between 800 and 1000 responses. Key areas of focus for the next release are the risk manager’s role in digital transformation, the risk manager’s contribution to sustainability, and the risk manager’s response to tougher insurance market conditions.

The state of the insurance market remains a hot topic as insurance buyers grapple with premium increases, capacity reductions, revised wordings and insurers pulling out of certain risks.

“I think risk managers are very frustrated with the insurance market,” says Hancke. “After we were locked down, it became clear that many traditional business interruption policies would fall short as businesses struggled to cope with the impact of the shutdown. Some of the national risk management associations have begun to call for state-backed solutions, in partnership with the insurance industry, for businesses to address future health crises and other rapidly emerging or systemic risks, such as cyber or natural disasters. At the EU level, FERMA presented a proposal for a public-private disaster risk framework to help businesses deal more effectively with future systemic crises. Despite some initial optimism, we see very little progress so far at national and European level.

“Risk managers would really like to see more bespoke solutions for risks such as reputation or cyber that cannot be tied to standard formulations,” she adds. “And with the market getting tougher, we’ll be in this situation for another year or two – so it’s going to be tough in 2022. I think some large insurance buyers might not see the point of shifting their exposure to the insurance market for certain lines of business. They might decide that it is time to self-insure, create new captives or expand the use of existing captives. This is a growing trend. which we can expect in 2022, even until 2023.”

Another key theme that has emerged during the pandemic is the role of risk management in building resilience within organizations. This was the topic of the recent FERMA report, The role of risk management in business resilience, which presents the view of risk and insurance professionals and senior executives, interviewed in the summer of 2021.

“The pandemic has put a premium on resilience,” says Hancke. “The discussion is no longer about how to manage risk, but about how businesses can become more resilient to a number of related risks. It also showed the importance of having a global vision of risks in order to limit losses in the supply chain and reduce costs.

“More than a quarter of respondents said they have already made changes to the supply chain and that it is an ongoing process. A risk manager noted that while his company previously focused only on the financial side of the supply chain, it has now taken a more holistic view, also looking at geographic footprint, compliance issues and others. aspects.

The report also shows how the focus on resilience has raised the profile of European risk and insurance management.

“Many participants identified the leadership team and the risk function as primarily responsible for resilience, but this also suggests that the risk functions now play a much larger role in managing resilience in a more holistic way, especially in coordination with other functions of a business or organization,” says Hancke. “Survey responses also showed that while risk managers feel well equipped now, or better equipped, there is still work to be done, and risk management is a real strategic priority.”

She has seen this confirmed in her own organization, where she was a crisis management champion for several years before recently stepping down the role to take over the leadership of the project management office within the Customer Success Risk Assurance team at SAP.

“When the pandemic hit, I really got hands-on experience in crisis management,” she says. “For so many years we did these table top exercises as part of our global crisis management policy – ​​and now I was performing these tasks instead of doing exercises.

“We already had a global framework in place and I am proud of how quickly SAP was able to set up a global pandemic task force, which built on our existing and well-established global crisis management framework. . She showed how important it is for an organization to be strong and have the ability to react quickly and actively when such an external risk materializes.

Hancke sees her involvement with FERMA and with the Danish risk management association DARIM (of which she is a board member) as key to her success as a risk manager.

“It can be lonely work – often there is only one of you in an organization, and I felt that if I wanted to exchange with peers, I had to settle with this network. Being a member of both associations means that I can contribute to FERMA by relaying what is happening at national level and giving feedback from FERMA to DARIM on what is happening at European level.

Another key objective of FERMA and its member associations is education. This is a subject very close to Hancke’s heart; she is Rimap certified and chairs the selection committee of the FERMA-Lloyd’s program. FERMA is developing a preparatory course for risk managers considering taking the Rimap exam and offering a hands-on workshop for the group of Rimap alumni.

Looking ahead to 2022, FERMA has just launched the 2022-2023 edition of the FERMA Lloyd Professional Development Program. This is a joint training and networking program run by Lloyd’s and FERMA for risk managers in Europe. This program is authorized by the FERMA Rimap certification program and will award CPD points to participants.

It’s a great opportunity to learn how Lloyd’s works,” says Hancke, who participated in the program during the 2017-2019 edition. “It was really a revelation for me. And I got so passionate that I said I would like to pilot this within FERMA.

Regarding the broader risk management landscape, she predicts that organizational resilience will continue to be a priority for risk managers.

“The pandemic is not over. Cyber ​​threats are still on the rise, as are extreme weather conditions. Still, expect shocks, be robust and plan for the unexpected. Good risk management will hopefully create- the, a resilience to a wide range of these circumstances and outcomes.

“Secondly, we see green and digital transitions, which bring new opportunities to organizations as well as risks – and there is the strategic aspect, where you take risks with maximum foresight to support your business goals.

“FERMA has chosen as its theme for 2022: Transitioning together: Risk Leadership in a Fast Changing World. I think overall, as risk managers, we always have to have one eye on the present and one eye on the future, because there are still new risks that could arise. But because of the pandemic, we have learned what resilience means and what it means to be robust and able to respond quickly. »

FERMA, Risk management, Cyber-risk, Insurance, Reinsurance, Charlotte Hedemark Hancke, Europe

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