The state of flux in the risk management function of U.S. companies presents risk managers with both an opportunity and a challenge. “The expectations of corporate managers for their risk management operations have risen,” says Brian Elowe, managing director of global risk management at insurance broker and risk consultant Marsh. “The world of risk management has become a much higher platform in many organizations over the last few years.” A recent survey conducted by Marsh and the Risk and Insurance Management Society (RIMS) shows rising demand among C-suite executives and corporate boards for risk quantification and deeper risk analytics, says Elowe. “They are also calling on risk managers to help the company succeed in its goals, as opposed to just mitigating or avoiding risks.”
The survey of more than 1,000 risk managers, C-suite executives and other corporate officers involved in “risk-related functions” found 54% want their risk managers to provide better quantification and analysis on risk management, to “develop a greater understanding of non-insurance risks” and, perhaps most importantly, to become more involved in the company’s strategic planning.
“What we’re seeing is part of an evolutionary process of the business of risk management,” says John Phelps, director of business risk solutions at Blue Cross/Blue Shield of Florida and a member of the RIMS board.
Phelps says that at his company, “there has been a great deal more emphasis for us to be much more proactive across a broad array of risks, instead of just dealing with the more traditional and insurable risks as we did years ago, and [enterprise risk management] is the vehicle to give us that broader view.”
For example, he notes that his office has begun looking at M&A deals and new partnerships. “What we can deliver to that process is the risks associated with the decisions,” Phelps says. “We’re not just getting in there to be another box to check. We think we can make these moves more successful.”
At other companies, too, risk managers are playing increasingly strategic roles. But Phelps says at many others, risk managers “may not be getting invited into the process.” Moving risk management into the realm of corporate strategy is going to be a process of “some push by risk managers, and some pull by C-suite executives,” he adds.
“We do see an opportunity for risk managers to move into higher profile areas of higher responsibility,” Elowe says. His advice to risk managers: “You don’t need to wait to be asked.
“Go ahead and drive yourself into that opportunity,” Elowe says. “This study shows that the C-suite is looking for that kind of help.”
See what Marsh’s Dan Glaser has to say about the role risk managers should play in shaping business strategy in Risk Managers to the Fore.