As part of its 30th anniversary celebrations, the IRM has surveyed members across the world to find out what the risk picture might look in 2025, what risk managers will need to focus on and how they might deliver.
Introducing the survey’s findings at its Risk Leaders 2017 event in London, IRM director Clive Thompson said the world has changed irretrievably during the institute’s 30 years, stressing that the pace of change is only likely to increase.
Respondents to the IRM’s latest survey believe that understanding and shaping organisational culture will be critical to managing risk in the next few years. Mr Thompson said risk managers will increasingly shape business culture in the future and will need to develop the right skills to take advantage of that expanding role.
The fact that risk managers will increasingly need to think ahead is another area of change facing the profession, the survey suggests. Previous assumptions can no longer be taken for granted and risk managers must prepare for scenarios changing at the drop of a hat, conference attendees were told.
Instead of historical data informing decision making and creating expectations for the future, risk managers are going to have to adapt to a world of the here and now, where history is no indicator of the future, they were warned.
During the next few years, risk professionals will also need to better show the value of their work and how good risk management can help create business opportunities, IRM survey respondents said. They believe that the use of big data and more advanced technology may help risk managers to show that value, while also allowing them to scan further afield for key risks.
To achieve this, “risk managers will need sound technical awareness”, said Mr Thompson. “We need to understand what is going into technology to understand what is coming out,” he added.
Survey respondents still feel they have a lot to learn when it comes to technological advances, however, particularly around blockchain.
The survey also reveals that risk managers believe economic, financial and geopolitical volatility, all huge areas of concern today, will become less pressing issues by 2025.
Climate change is viewed as a key risk going forward by many survey respondents. Ageing populations are also flagged as a big risk area for 2025 in developed economies. In addition, survey respondents believe the risk profession must be more diverse going forward, with increasing need to recruit the right talent for the new business world.
The good news is that most respondents predict an increased focus on risk management, as well as a growing headcount and budget to carry out the task.
Speaking at the IRM event, Karlene Agard, risk manager at Transport for London, explained that 78% of those surveyed expect greater involvement from line management in risk management.
“This would indicate that risk management will be more embedded in organisations than ever before,” she said.
One survey respondent’s comments sum up the likely future of risk management well, said the IRM: “In the future, risk management must become more agile, creative and adaptive”, while risk managers must become “more business-aware and open”.
Professor Mervyn King – chairman of the King Committee on Corporate Governance in South Africa, chairman of the International Integrated Reporting Council and key speaker at the IRM Risk Leaders conference – built on one the survey’s key findings by arguing that changing corporate thinking will be crucial to the survival of many businesses.
He firmly believes corporations need to rethink their structures if they are to continue to succeed. Businesses must change from short-term profit to value creation in a sustainable manner, he added.
Gone are the days when rewarding shareholders is the only goal, said Mr King. In today’s world, businesses must think beyond their own four walls and consider the social environment in which they operate, he added.
“The world has moved away from the plague of short-term profit,” said Mr King. “Now we have to try and shift companies into the avenue of sustainable capital.”
Risk managers will have to keep this mind as their companies define strategies, he continued. Using the example of Coca-Cola, he noted that a link between fizzy drinks and obesity in the US has led the company to rethink its priorities. It now offers its lower calorie Life drink as a result.
Mr King believes that the switch from tangible to intangible assets is only likely to grow, and risk managers need to change their outlook accordingly.
Becoming more open and accessible to the surrounding environment will also include greater accountability for business when things go wrong, he added.
Changing the culture of an organisation includes allowing whistleblowers the space to come forward, without consequence. Mike Gill, former deputy CEO of Mid-Staffordshire Hospital; Sarah O’Donovan, chief credit risk officer at Barclaycard UK; and Robert Smith, director business compliance and ethics at Serco, gave presentations at the IRM event and all explained they have experienced whistleblowers going public.
They told delegates it is crucial that staff can speak up when something is going wrong – and for those concerns to be listened to and acknowledged.
Often people do not have a proper channel to voice concerns and too often they are ignored, the experts said. For risk managers, it is crucial that whistleblowers are supported and heard, particularly in today’s social media environment, they added.