Risk managing the recession is one of the biggest challenges facing corporate insurance buyers today, according to Peter den Dekker, president of Ferma (the Federation of European Risk Management Associations).
Speaking to lloyds.com in the run up to the bi-annual Ferma Forum, held in Prague this year from 4 – 7 October, the risk management leader said that the combination of financial crisis and recession has put all risk practitioners in unfamiliar territory.
The economic downturn has created problems for corporate risk managers, according to den Dekker, as their companies look for ways to maintain profitability. With new contracts in short supply, companies are often forced to acquire business by cutting prices, taking on more risk or accepting tough conditions.
In this climate, the risk manager, as the conscience of the company, runs the risk of being seen by others as someone who is frustrating deals, den Dekker says.
“That’s why risk managers have to have a big personality and be able to stand up to boards,” den Dekker maintains. “OK, the risk manager does not bring in new business - but the risk manager certainly facilitates healthy new business.”
In den Dekker’s opinion, the crisis has pointed up the difference - in financial institutions and in industry - between the short term approach of senior managers and the longterm approach of risk managers. “Too often the senior management in many companies had an agenda based on short term returns and didn’t want to listen to risk managers,” he said. “Short termism got us into this crisis.”
Now there is a renewed focus on risk management and a fashion for appointing CROs, den Dekker believes. But if you don’t embed risk management in the corporate culture, that is simply window dressing.
“Appointing risk managers to the board won’t necessarily help: the risk manager is not a decision maker – the risk manager is a decision facilitator, working across all disciplines,” den Dekker said. “That applies whether you’re talking about operational risk, financial risk or insurable risk.”
About Ferma
Ferma is made up of the national risk management associations of 16 countries. It represents over 5,000 individual members and a wide range of business sectors from manufacturing to financial services, charities and health organizations as well as local government organizations.
The Brussels based organization exists to widen and raise the culture of risk management throughout Europe to its members and to the risk management and insurance community. It promotes and raises awareness of risk management through the media, by information sharing, educational and research projects.
The theme of this year’s bi-annual Ferma Forum is “Global Village – The Future of Risk Management”. Speakers include risk managers from some of Europe’s leading corporations. The workshops and networking events cover specific practical topicss as well as wider industry issues.
