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We live in a new risk environment of an unprecedented level of complexity, one that raises a genuine challenge for our businesses: this is what the vast majority of participants at the AIRMIC conference held earlier this month in Bournemouth, England, told us.
Regulations, conformity, cyber risks, supply chains and natural events are just some of the elements that comprise this risk universe. It is impossible to come up with an exhaustive list of risks, since some are unpredictable, while others are either emerging or simply unknown.
How are businesses responding in this new environment? They have to deal with the immediate constraints, since there are many factors in the regulatory and economic environment that are more or less beyond their control:
They have also suffered the backlash of the economic crisis in recent years. In the face of a looming recession, businesses have had to rethink their supply chains, restructure their businesses, explore new markets, innovate, reduce their budgets to cut expenses, and find a way to offset lower earnings.
Simultaneously, the industry has been hit by an unexpected number of major events, such as natural disasters, geopolitical instability, cyber-attacks and fraud, plus changing regulations that have revealed critical situations.
Risk Managers have been able to meet these new challenges successfully by rapidly making the decisions that needed to be made on short-term issues.
But is this enough?
It is now time to come back to certain fundamentals and reconsider the basic elements of risk analysis and assessment of exposures. These analyses – still relevant not long ago – have been blown away by the sheer intensity and the nature of the risks to which businesses are exposed in today’s world.
Risk mapping, analysis, assessment, prevention and transfer are the key factors to be taken into account. With the help of their broker and their insurer, Risk Managers must first make sure of the fundamentals of their risk management policy, by starting with those over which they have control (in particular prevention policy) before turning to consider possible risk transfer solutions.
The priority was given to new and immediate dangers and to the severity of impact in a crisis management configuration.
Working together, let’s try and support a necessary strategy for managing risks over the long term!
CEO, AXA Corporate Solutions UK
Back from “Embracing New Horizons”, AIRMIC June 2011