What should risk management look like in the future? | Insurance business America
RiskNZ CEO David Turner breaks it down
Risk management news
By Terry Gangcuangco
“If we don’t challenge and ask the right questions, we create risks.”
Those were the words of RiskNZ managing director David Turner (pictured) as he sat down with Insurance Business to talk about the future of risk management and how he believes leaders should approach the function to achieve optimal results.
Risk management from above and across the board
According to Turner, risk management is directly related to running a company, which means that how much appreciation risk management receives from above is crucial.
“Leadership is the single greatest influence on risk management today,” claimed Turner. “If leadership doesn’t understand the importance of risk, risk management won’t get the right attention, the right support, and the right funding.”
More importantly, says RiskNZ’s CEO, understanding leadership will lead to the big questions that need to be asked. For example, boards need to better assess risk, know what they are reading and know how to ask questions appropriately.
“If leadership doesn’t understand how to read and question risk management reports, then risk management can be skewed in the wrong direction,” he said. “Leaders need to understand risk management across the organization and not just pay lip service to it.”
Turner pointed out that while risk management teams have the experience and expertise, executives cannot rely on them alone to steer the direction of a company.
“They need to help make calculated, logical decisions,” Turner explained. “If they don’t do that, the organization only moves forward based on what it is told, and that has become a habit in some organizations.
“Risk reports and advice typically come from a small department or team within an organization that handles risk. In fact, this risk team influences the course of this organization.”
Risk management: questioning and challenging
The CEO made it clear that it is usually not a question of trust or competence, but rather a question of realistic checks and balances and thoroughness.
“Good risk management is two things,” Turner told Insurance Business. “It is a question and a challenge. This is real risk management. A third thing would be good communication. We tend not to take enough time to understand why and how things are decided in risk management and why we choose the remedies or paths we take.
“We often take information into account and say it must be correct, which sometimes leads to the wrong decision. We need to look much more closely at risks and the causes of risk. It may be uncomfortable for some, but this is good advice, which means looking into the matter and challenging the status quo when necessary, making sure the right information is presented, and judging from there.
He further explained: “In some organizations, their risk managers and teams have a good, comprehensive understanding of what they should be looking for, and they look at all the risks and issues they can, from point A to point Z, and they prioritize , what they should be looking for, and they do it quite well. Other organizations may not have this comprehensive understanding.
“Some consultants also need to ensure that not just great ideas are presented and not just hopes sold, but that real and realistic solutions, defined goals and a good level of substance are provided to not only meet the needs and expectations of the organization. “ but also help improve our risk industry. I think we still have a long way to go.
“The best thing we can do is ask and make sure we’re going down the right path, that we’re all looking at the right things, and that all concerns and questions are being addressed.” Also, let’s use the right technologies and what technologies could we will need in the future? That doesn’t mean it’s threatening; Rather, it’s about making sure there’s a stepping stone… That’s all – it’s certainty – but we need to practice this more as we move forward as organizations.”
Risk managers as effective communicators
On the risk manager side, Turner highlighted the need for them to be effective communicators within the scope of their duties.
“It’s not enough to be a really good risk manager, to be able to produce reports, do good assessments and then deny them,” he said. “That’s only half the battle. We need to know how to communicate risk management to everyone in the organization at every level, how to educate about what risk means, how everyone can use it, and what we should pay attention to and ask.
“We should also write it in a way that makes it easy for people to understand, even in layman’s terms, what exactly we’re conveying and what the actual risks are, so that people have the opportunity to look at it and ask questions.” The biggest risk we in some organizations is the risk management team itself may have made it too complicated and people can’t understand it.
“The less we understand about something like risk management, the fewer questions we will ask and the more we will accept. “It’s not about making everyone in the organization an expert, but it’s definitely about making sure that it is It becomes a habit to have good conversations about risk management and for everyone to value it for what it is. This leads to risk management success.
In a complex world where we are experiencing increasing change, Turner believes that a risk manager’s job becomes easier if they continually learn to acquire more comprehensive knowledge while ensuring that they can then communicate that knowledge.
David has over 25 years of experience in the risk management industry and has worked in over 40 industries alongside thousands of people and hundreds of executives. He has seen the best and the not-so-good and learned what needs to grow and improve to make risk practices truly effective.
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2024-05-22 19:56:06
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