The future of risk management – Island of Ireland Forum panel debate

The risk profession is a broad church bringing together many disciplines, roles and skill sets. A discussion at the Island of Ireland Forum held in Dublin on 25 October asked several panellists to share their own personal journeys and perspectives on navigating their professional futures.

The breadth of the profession and the many actors within insurance and risk transfer were evident in the career path described by Áine Burns, Insurance Placement Manager, Irish Water.

Her career spanned working for an insurance firm, a global reinsurance business, and a capital management business, providing her with broad experience of the many ways of placing and transferring risk, before she returned to Ireland to work as an insurance placement manager.

Her role involves “constantly changing” views of emerging and evolving risks, rather than an insurer’s perspective based around renewals, she emphasised.

“We work closely with the whole of the business to understand the risks, and then we work closely with our brokers and insurers to get the appropriate resolutions for the company, and also to make sure that we’re getting the broadest level of coverage at the most economical price,” Burns said.

The importance of knowing the business when managing an in-house insurance programme was underlined by Karen Ward, Senior Insurance Manager, Tarmac. While the risk or insurance function may sit within the finance team, this means getting out in the business and familiarising yourself with operational processes, before relating these to policies and gaps in coverage, she stressed.

“The foundations of achieving those targets sit out in the operational business, so you need to cast your net wider. Whether you’re in manufacturing, retail or construction, you need to physically go out into the business, go to sites, go to production lines,” she said.

“You’ll find equivalents of risk managers who don’t know they’re risk managers, doing the operational part of the business as safely as they can, doing risk management functions without realising they’re risk management,” Ward continued.

The benefits include greater buy-in from internal stakeholders into risk management initiatives, she suggested, as well as providing an insurance underwriter with a better view of risk, allowing them to raise their ‘worst case’ estimates, based on claims values and business turnover at risk, crucial inputs factors in calculating premium levels.

“What you need to do is be more than a proposal form. You need to bring the business to life, demonstrate how you evaluated and mitigated your risk, demonstrate how you applied risk transfer, and then only pay for the risk that is truly borne by the insurers,” Ward added.

Airmic CEO Julia Graham noted a positive trend of risk management and insurance professionals working more closely together, and depending on their circumstances, some instances of managing both areas of responsibility.

Julia summarised her own career journey through the risk profession, coming from an underwriting background to eventually serve as the director of risk and insurance for a large and expanding legal firm, managing a team of 60 people, before joining Airmic’s executive team.

“It was a very large team because we recognised the value of managing risk, because we were very entrepreneurial, and it would have been very easy to make big mistakes and go off the rails when you were expanding as rapidly as we were. I worked for a senior partner, who realised that and started with a blank sheet of paper to design what we thought we needed,” she said.

This provided an opportunity to use Airmic to provide value at scale, Julia emphasised, by taking out a membership so that the whole team could benefit from the training and career development opportunities offered, Julia said.

Julia pointed to environmental, social and governance (ESG) issues as an increased focus within the risk profession, noting the results of recent Airmic research into the topic.

“ESG has become an integral part of the risk management profession,” she said. “Some 45% of those who replied to the survey have responsibilities in ESG for their organisation. It’s an incredible percentage which has arisen in a very short period of time.”

She warned that, in the past, risk has been seen as “the unit of business prevention”, but that this has changed over the years. In recent years, more widespread instances of the risk function reporting to board level, particularly relating to resilience, crisis management and business continuity planning, have given risk professionals a useful platform and allowed the risk function to take more ownership of ESG issues in particular, she suggested.

“We found that risk managers were invited into the boardroom and that they did a good job,” Julia added. “And that after they’d done that job, they didn’t get put back in the box. Instead, they were allowed to stay. The key issue there is that if you’re looking to be courageous and then to stay on that stage, you’d better know what you’re talking about.”

ESG was among the hot topics for the risk profession throughout the conference, noted Judith Wylie, Senior Lecturer, Department of Accounting, Finance and Economics, Ulster University.

“It’s ESG, it’s data management, it’s data protection and cyber risk,” she said. “For every one of our students, no matter if they’re studying finance, economics, accounting or business studies, we’re making sure that those core elements are included.”

The skillsets of young people entering the profession are changing dramatically, particularly as Millennials, Gen-Z and Gen-A grow up as digital natives with potentially very different career goals and ideas.

“It’s not to say that there’s one pathway into insurance or one pathway into risk management. There shouldn’t be, given that every organisation is dynamic and different. It’s great to take core skills and/or graduate qualities to make sure that we’re getting the future skills right to form the talent pool that the risk profession needs,” Wylie added.