Fourth industrial revolution demands new approach to risk and resilience
Boards need to reappraise their approaches to risk management to take full advantage of the opportunities presented by the so-called Fourth Industrial Revolution, according to a new report for Airmic prepared by the City Business School. It advises that the risks associated with digital transformation can be addressed effectively given the right approach, and it recommends a way forward based on adapting and adding to principles of resilience that have proved effective in the past.
‘Roads to Revolution’ asks the question: 'How are organisations transforming their business models to ensure resilience, value and growth in the digital age?' It follows the highly acclaimed 'Roads to Ruin' and 'Roads to Resilience' reports, which examined corporate resilience from the differing perspectives of companies that have had big failures and those that have robust systems in place to avoid them.
The new report examines the way digital technology has become much more than just an efficient way of doing things, but at the core of how firms work. Whilst acknowledging the far-reaching benefits of the Fourth Industrial Revolution, it warns:
“Board members need to understand that organisational resilience alone is insufficient in the digital age. Continuous business model reinvention is necessary not just for future success, but for the very survival of the organisation.”
It goes on to say that digital developments have added to the importance of good cyber-governance*, whilst national regulatory guidelines have not kept pace with the changes:
“The challenges that digital transformation poses to corporate governance are daunting. Legacy corporate governance principles and factors … do not seem adequate to provide effective monitoring, strategy and legitimacy to organisations.”
The Airmic Resilience and Transformation Model
In response to these developments, the report updates the Airmic Resilience Model, first unveiled in Roads to Resilience (2014). The original version has proved robust and has five principles, which have been enhanced, with a further three added (see next page).
“Roads to Revolution is intended to support boards and risk managers alike in these exciting times,” said Airmic deputy CEO and technical director Julia Graham. “Our report contains a positive message. The risks associated with digital advances may be unprecedented but they can be managed. And we commend the revised Airmic Resilience Model as a tool and guide for doing so.”
The report is currently available in summary form and in the technical section of the Airmic website. It contains a series of case studies with successful organisations considered by City Business School. Airmic thanks FM Global, KPMG, Marsh & McLennan, Russell Group, Zurich Insurance for their support and advice.
Airmic represents around 1,200 risk managers. Its annual conference takes place in Liverpool June 11-13.
For further information, please contact Mark Baylis, Complete Communications, mark.baylis@airmic.com, 07775 693994.
*Separately Airmic has today published a summary of a recent roundtable in which a wide range of professionals and experts discussed the need to improve cyber-governance.
Note to editors. A summary of the new Airmic Resilience and Transformation Model
