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IRM SIG Presentation October2016.pptx [Read-Only]

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IRM SIG Presentation October2016.pptx [Read-Only]

  1. 1. STRATEGY I INNOVATION I EXPERTISEPRIVATE & CONFIDENTIAL | WWW.RQIH.COM | 18TH OCTOBER 2016 1IRM PRESENTATION OCTOBER 2016 Susan Young Chief Risk Officer Randall & Quilter Investment Holdings Ltd. ERM IN INSURANCE SPECIAL INTEREST GROUP – OCTOBER 2016 CULTURE CHANGE IN PRACTICE
  2. 2. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | 2 DISCLAIMER The thoughts and opinions expressed in this presentation are my own and do not represent those of my organisation
  3. 3. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | 3 SESSION OUTLINE • Risk Culture – What Is It? • Risk Culture – Imperatives • Risk Culture – the Dilemma for Organisations • Shaping Culture – Defining Risk • Shaping Culture – its place in an Enterprise Risk Management Framework • Shaping Culture – Role of the Risk Management Function • Practical Challenges • Concluding Remarks
  4. 4. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | 4 RISK CULTURE – WHAT IS IT? Good question! Some definitions - Contd…. “The general awareness, attitude and behaviour of its employees and appointed representatives to risk and the management of risk within the organisation” FSA, 2006 “The values, beliefs, knowledge and understanding about risk shared by a group of people with a common purpose, in particular the employees of an organisation or of teams or groups within an organisation” IRM, 2012
  5. 5. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | • A crowded space in terms of scrutiny and research • Many definitions – previous slide has only two • Common threads are; - Behaviours - How these are shaped and influenced - How they manifest themselves • Difficult to pin down and measure – but measure we must – as what doesn’t get measured doesn’t get managed! 5 RISK CULTURE – WHAT IS IT? It cannot be ignored Some thoughts;-
  6. 6. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | • Global Financial Crisis of 2007-2008 • Financial misselling – PPI • LIBOR fixing • Disasters such as Deepwater Horizon Manifestations of a lack of Risk Culture – siloed approaches, focus on top line, lack of transparency and communication, customer focus not evident 6 RISK CULTURE - IMPERATIVES Some examples -
  7. 7. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | • The Elephant in the Room - is there not an element of Risk Culture in all businesses – after all, risk taking is how a business succeeds – why do we need to “ring-fence” it as an issue? • But – - How does an organisation define its own culture in terms of taking risk? - How do we measure and assess it? - We know what “bad” looks like – but what about “good”? - A key area of regulatory scrutiny post said events 7 RISK CULTURE – THE DILEMMA FOR ORGANISATIONS Some rhetorical questions - Contd.
  8. 8. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | 8 • Tone from the top – overused but important nonetheless. Do the Board and Executive management embrace it as a concept? • Too much box ticking can stifle entrepreneurial spirit and encourage risk aversion – this has been a criticism of Solvency II. Surely we don’t need more? • How do we as an organisation talk about, define, perceive, manage, mitigate and identify risk? • What is the engagement at the grass roots level? Formal vs Informal? • Is Risk Management a “go to” function? • Do we need separate metrics? Can’t we use and adapt what we already have? We don’t have all the answers – but we need to keep asking the questions RISK CULTURE – THE DILEMMA FOR ORGANISATIONS Some more rhetorical questions -
  9. 9. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | 9 SHAPING CULTURE – DEFINING RISK • “Risk” as a term has negative connotations in many quarters– like it or not. • This is despite the Risk Management Profession espousing the distinction between upside and downside risk • Is it time to reshape and remould the role of the Risk Management Function with this in mind– and perhaps bring Oversight and Opportunity into our remits?!?! • This will not happen overnight. Food for thought A potential opportunity? -
  10. 10. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | 10 SHAPING CULTURE – ITS PLACE IN AN ENTERPRISE RISK MANAGEMENT FRAMEWORK • ERM evolves as a Cycle;- Develop it: Design the Framework Implement it: Roll it out and embed it Live it: – make it part of our organisational values • Education – Risk Management is an agent for constructive change – the aim is not to blame (for example Incident Reporting) – this can take time to “gel” • First Line Risk Management – This should be defined into people’s roles – including the Board and Executive Management, as well as those at the coalface. • Consistent Risk Management Framework – tailorable to the nuances of the individual parts of the business. We shouldn't need to think about it day to day – it should pervade.
  11. 11. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | 11 • The footprint of the Risk Management Function within the organisation has been cited as a possible measure of culture • Our standing/influence/visibility and is it appropriate – whatever that means for our organisations • Striking the right balance –maintain visibility but don’t waste senior management time • SII has for the last decade provided a regulatory “stick” – it’s now time for the value add “carrot” – many of us have been working on this - the IRM’s recent publication refers • There is also an element of “going back to our knitting” and helping the business manage its risks – with an enhanced modus operandi and mandate • There is definitely an appetite for Risk Management to become more strategic – ticking boxes cannot be the linchpin of what we do. Much of this is within our gift SHAPING CULTURE – THE ROLE OF THE RISK MANAGEMENT FUNCTION
  12. 12. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | 12 PRACTICAL CONSIDERATIONS • First line of Defence - Do they have the right support to carry this out? Do they embrace it? • Consistency – see previous slide. • Transparency and Communication – is Risk MI understood and communicated? And acted upon? • Utilise what is there - don’t create unnecessary bureaucracy – and remember perception is often reality. • Hygiene factors – do we look after these - like keeping the Business Continuity Plans up to date/reviewing and maintaining our Risk Registers, etc.? Write it down and make it known! Not an exhaustive list but a few considerations -
  13. 13. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | 13 CONCLUDING REMARKS • Risk Culture isn't going away • Horses for courses - one size will almost certainly not fit all • Be the “go to” function – but empower the first line with the Board’s support • Get in on strategic initiatives – there is no better time • Educate, educate, educate • Talk to people – make it all about them It’s all about balance – and striking the right one. Good luck!
  14. 14. STRATEGY I INNOVATION I EXPERTISE | WWW.RQIH.COM | 14 Thank you for listening! Any Questions? AND FINALLY…….. Susan.young@rqih.com DD +44 (0) 20 7780 5882 www.rqih.com

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