The Institute of Risk Management (IRM) Innovation Special Interest Group (SIG)[1] published their Organisational Guide for Risk Managers last week.
The report collated the expertise of some of the industry’s most senior professionals and consolidated the latest thinking with regards to resilience and where risk management forms a key component for companies looking to not only survive, but also grow by identifying opportunities for the new future. Furthermore, this guide attempts to capture existing risk methodology and techniques used by multiple companies to provide you with best practices in an unbiased setting to evaluate the adequacy and maturity of your organisational resilience.
Why this paper?
With Covid-19 continuing to significantly challenge the world, coupled with many other potential risks such as those related to climate change, extreme weather disruptions, terrorism and cybercrime, this paper addresses how organisations can define and develop organisational resilience strategies and how approaches could and should be evolving in the light of contemporary events.
Research conducted by EY suggests that 80% of Financial Services Boards felt prepared for a major risk event such as the Covid-19 pandemic, whilst 80% non-FS Boards felt unprepared for such as an event[2]. Though these events may be recorded in risk registers, research suggests that the uncertainty comes from when they will happen and whether they will happen separately or concomitantly. More than this, as Satarla has seen in many organisations, just because it is recorded on a risk register, does not mean that it is being actively managed.
A few key takeaways from the Guide
The IRM state in this document that there are two misleading features in the conceptualisation of resilience. The first refers to disruptions outside, out of the control of the organisations, which may imply that companies should take a passive role in this regard. Furthermore, it implies that after changes, organisations should go back to the way they were doing things. However, the IRM noted that an essential component for successful risk management is learning from previous mistakes which may come internally or externally from organisational practices. Thus, they believe that resilience is not only about being prepared to respond satisfactory to disruptions, but also to create value and enhance opportunities. Hence through an Enterprise Risk management (ERM) framework, businesses can embrace a more holistic upside perspective of resilience. Thus, resilience can be an instrument to create value and competitive advantage. Indeed, companies like General Electric, IBM, and Swiss Re see the emerging interest in resilience as an opportunity for new products, services, and market[1].
The IRM also noted that resilience works best when it includes proactive resilience to prevent a crisis from occurring and reactive resilience to respond effectively. This crucial and holistic balance enables a very close, inextricable link with risks and their management. Therefore, we must be cautious against focusing only on business continuity in response to disruptive events. Resilience is an integrator of people and processes, which proactively seeks to balance perspectives and resources.
Conclusion
Satarla is very delighted to co-chair the Innovation Special Interest Group (SIG) and really enjoyed working with all the experts involved in developing this insightful paper.
We hope that you find this guide valuable and would love to hear your thoughts, so please feel free to share your comments.
For further support on risk management strategies and techniques from our experts, please feel free to take look at our upcoming events, training courses and insights on our website: www.satarla.com
[2] Seville, E. (2016). Resilient organizations: How to survive, thrive and create opportunities through crisis and change. London: Kogan Page Publishers.
[3] https://www.ey.com/en_us/news/2020/04/nearly-80-percent-of-board-members-felt-unprepared-for-a-major-risk-event-like-covid-19-ey-survey
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