Risk management at business core
Risk management is no longer an isolated backroom function; it has become more of a core part of businesses and the expectations of risk professionals have risen as a result, Drew Hart, risk manager Europe for Marriott International, told Airmic Today.
“You have to be able to put it in graphs and figures and explain exactly why you’re taking that position.”
The trend of risk managers becoming more influential has increased over the past 10 years but, Hart said, advancements in technology have speeded up this process and are “revolutionising our profession”. Even simple things like the digitisation of records are driving this change.
“Taking a basic example, records used to be recorded on paper. Even after we started moving to computers and using software, a lot of the time there was a bit of paper being scanned into the system. It was essentially a digital filing cabinet.
“Now, with mobile devices, these things are being completely digitised, and the expectation is that you’ll have instantaneous access to records and logs—not just to be able to find it, but to pull out specific lines of data,” he said.
Understanding advancing technology will be a key skill for future risk professionals, Hart said. This will extend, he believes, to working alongside IT professionals to establish the most suitable software and technology for a firm.
“You have to be the one driving it, saying ‘we know this is possible, how can you get us there?’.”
Rapidly evolving technology also affects the kinds of emerging risks companies must grapple with, some of which are “a real challenge”, Hart said.
“People are becoming more aware of supply chain risks and looking for risk transfer solutions to those exposures. Previously that was not on the agenda as much,” he said.
He added that as expectations have moved towards demands being met immediately, and with everything interconnected, supply chains are a much bigger exposure than they were traditionally.
Cyber risk complicates matters further, especially as it is always changing, bringing constant new challenges for risk professionals.
Another non-traditional risk is reputational harm. “Historically, it’s been seen as a consequential risk. Before, your reputational harm stemmed from another risk and an incident involving that risk, but now it’s a standalone risk,” Hart said.
“You can have the behaviour or the image of the company damaged through easy access to news on social media, and how people connect and communicate these days.”
Hart added that there has been a “changing of the old guard” as people with 30 to 40 years in the profession, who might have lived through many global, political and sociological changes, retire or leave their careers early.
“One of the challenges we are facing is that there aren’t enough people who have seen the kinds of changes, such as a severely hardening market, that we’re seeing now. In terms of environmental changes, no-one has been through this before,” he said.
Fast-moving change
As a risk manager at Marriott, the biggest challenge for Hart is the company’s size and international reach.
“Trying to get risk management consistent across an organisation of this size is a challenge. It’s something we’re working through to respond to those things quickly, although that is a challenge for an organisation of this size,” he said.
“That’s a hallmark of the modern world. Everything is moving more and more quickly; you can’t take years to respond to these things any more because by the time you’ve responded it will have changed again and you’ll still be behind.”
He has also seen a rise in the demand for risk professionals to justify their position.
“It goes back to the increased availability and digitisation of data. Everything is quantitative and objective now, so there’s an expectation that if you take a stance, you have to be able to put it in graphs and figures and explain exactly why you’re taking that position, and use that to facilitate the company’s goals.”
For example, Marriott has seen the rise of the “Instagram generation”, which has prompted a shift in the firm’s philosophy. This group loves travelling and having experiences that they can share visually.
“We’ve had to adjust our approach when marketing to them. They want to do exciting things with higher risk, and we look at how to mitigate that risk. For example, this young, modern group of travellers relish activities like boat parties.”
Looking at the future of the risk profession, Hart feels the ever-increasing pace of life and change will be a crucial factor.
“It’s the speed with which you have to react to regulatory changes, and also the speed that other people are reacting. Cyber risk and environmental risk are classic examples.
“Where government might have once taken years to address them, now it’ll be months. We in turn have to respond much more quickly,” he concluded.
