The ERM professional is evolving...

enterprise risk management

Keith Jones Risk, Permanent

History is full of numerous examples of disruption caused due to changes in the business environment. Ranging from the Industrial Revolution to the global financial crash, these incidents have turned the world upside down. Enterprise-Wide Risk Management (ERM) is the key to building an organisation's risk competency; its ability to identify, assess and prepare for any risks that may interfere with an entity's goals and objectives and is crucial for its growth and development.

Consequently today, the demand for senior ERM professionals is evolving, as with most other professions, owing to the exponential pace of technology advancements along with societal change. Unfortunately, ERM professionals are not in the same boat as everyone else. Their role requires them to do a lot more than join everyone else in bailing out the sinking ship or running for the life raft, they have to remain in the crow's nest looking out for the next storm on the horizon.

Developing the right skill set to recognise and analyse the pace and impact of the change in the digital age presents challenges to ERM professional regardless of their background.

What does their role look like?

Deconstructing the 3 to 5-year strategies of a firm against such a dynamic backdrop requires an in-depth understanding of the product portfolio, operating environment and customer base to a degree that enables one to recognise the ripple through independencies and correlations as each new wave hits. They need to place their firm and its clients at the epicentre as neither a case of making high-level global emerging risk statements nor of navel-gazing tactical analysis, indeed the traditional bucketing of risks can only serve to constrain the new mindset as emerging risk slams into strategic risk due to an ever-shortening braking distance. 

Today’s risk professional requires a broad understanding of an evolving world and an ability to hone that down to determine how it warps and stresses the operating model.

"I hear a lot of buzzwords being used, such as AI, RPA, automation, bots, big data and advanced analytics, then of course there are the sharing, episodic, social media expressive and totally connected millennials, with Gen Z nipping at their heels but it is the role of the ERM professionals to enable the strategists and decision-makers to work out what this means in terms of our customer base, access to market, product relevance, and service delivery and thus ultimately the PnL."

- Senior Risk Leader in the London Insurance Market

Getting the threat evaluation right, which means being relevant, bottom-line indicative and timely, can be rewarded with more than just defensive actions to allow a firm to live to fight another day. Done well it can allow a firm to generate opportunity actions that enable them to steal a march on the competition and exploit that window of uncertainty-into-disruption. So the ERM professional of today (if there is to be a tomorrow) needs to be part seer, part financial planning and market analyst, and part technology guru, whilst the ERM professional of tomorrow needs to be a heavily augmented cyborg so as not to be completely disrupted by the MK 1 Risk Robot as it machine learns ERM.                  



Change and disruption – Enterprise Risk Management by LEIGHTON MCKNIGHT (2018)

Next generation enterprise risk management by EY

Special thanks to the Senior Risk Leader in the London Insurance Market for his contribution