Risk Management: Don’t drive forward with all your attention in the rear-view mirror

Jennifer Hermes, writing for Environmental Leader:

Risk management professionals should be leading the charge to help their companies understand how disruptive technologies will affect business strategies and operations – and those risk managers who don’t lead the way will be relegated to a support role, according to the new 2017 Excellence in Risk Management (PDF) report. Disruptive technologies as defined in the report – for example, telematics, sensors, smart buildings and the Internet of Things – are those that either purposefully displace existing products or that introduce groundbreaking ways of doing business. The report, created by Marsh & McLennan Companies in partnership with Risk & Insurance Management Society (RIMS), suggests that risk managers may be focusing, to their detriment, on current rather than emerging risk.

Companies that integrate such technologies early on are generally able to stay ahead of their competitors, but they also face a significant challenge: while innovation allows companies to keep their business models fresh, it also disrupts an organization, making risks more complex. Risk management professionals need to adopt a proactive approach to these technologies, understand the risks and rewards, and educate executives on how those risks and rewards will impact business strategies, the report suggests.

What are some ways to approach risk in a more proactive manner? Excellence in Risk Management states the following:

  • Engage key stakeholders, from senior leaders to operations employees and even suppliers, in looking at risk and bringing their insights to the decision-making process;
  • Invest in the use of data, analytics and technology;
  • Educate about risk management across the organization;
  • Integrate risk management into strategic planning.
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