Future of Risk

by Victoria Robinson, Head of Marketing and Communications, Institute of Risk Management

Industry View from

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The future of risk in a volatile, complex and ambiguous world

As 2019 draws to a close, the business environment is facing ever more uncertainty. We’ve seen Brexit negotiations polarise the country, climate change protestors in many major cities globally, well-known high street chains (including the newly bailed-out Thomas Cook) going into liquidation, and the landmark GDPR case for British Airways in the courts. 

 

We recently had World Anti-Slavery Day to help draw attention to modern slavery. According to Anti-Slavery UK, the UK government estimates there are tens of thousands of people in slavery in Britain today. In 2017, over 5,000 people were referred to British authorities as potential victims of slavery. Up one third from 2016, this included over 2,000 children. 2016 saw the first conviction and sentencing of a British businessman for human trafficking. Businesses need to be cognisant of their working practices and aware of every link in the supply chain and the impact if something goes wrong. Can you safely say you know every link and its provenance?

 

All businesses are under a legal obligation to be able to check and verify the robustness of their supply chains. It is imperative that businesses consider supply chain risks as part of their enterprise-wide business models. The UK’s Modern Slavery Act 2015 includes an innovative transparency and reporting clause (Section 54 – Transparency in Supply Chains) requiring larger organisations to make an annual “slavery and human trafficking report” that sets out what they do to “ensure that slavery and human trafficking is not taking place in any of its supply chains, and in any part of its own business.”

 

It may be a common misconception that only food and agricultural industries are at risk of exploitation in their supply chains, but we have also seen instances in retail – particularly clothing, where huge well-known companies have been shown to have been using child labour at the root of the supply chain. Clearly this is not good for brand perception and reputation – and somehow consumers are shocked but not altogether surprised. Interestingly two historic cases focused on companies that preached good CSR practices in their advertising.

There is always scope for inappropriate behaviour where people and processes are involved and our stance is that these vulnerabilities should be considered as part of risk-modelling to protect human rights as part of the overall risk management strategy.

 

IRM is playing its part in raising standards in this area: we are launching our new Supply Chain Risk Management Certificate imminently.

 

We’re also launching two new reports in partnership with the Cambridge Centre for Risk Studies (University of Cambridge Judge Business School): Risk Management for the Consumer Sectors, and Scenario Applications: Stress Testing Companies in the Energy Value Chain. We’re also launching our guide, How to Hire a Great Chief Risk Officer, at our Risk Leaders conference this month. All of these documents will be available for download through our website which has itself been updated and refreshed.

 

This year the IRM will place significant emphasis on supporting businesses and risk professionals on how to understand, manage and take advantage of game-changing risks such as cyber-crime, AI and big data, operational risk and risks in the supply chain. The recent launch of our new Digital Risk Management Certificate, which was developed with support from Warwick University, is part of this initiative.

 

The world is a volatile and uncertain place and all of these micro and macro factors have an effect on how businesses trade and manage their day-to-day. The role of a risk manager has never been more important.

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