Steady as she goes - Chairman Nicholas Bailey has found no reason to lead Airmic into battle during his year in office, but reckons the association has made great progress on a number of fronts.
Nicholas Bailey has ‘enjoyed the ride’ of being Airmic chairman – a role he has approached with candour and good humour. He spoke to Lee Coppack.
Airmic is not going to take over the world, according to its outgoing chairman. Indeed, it’s hard to imagine the cool Nicholas Bailey leading a frenzied charge against internal auditors, company secretaries or compliance officers to capture the whole of the risk territory.
A low-key expeditionary force to the uncaptured risk professionals among the ranks of the FTSE100 and 250 is more his style and in line with Airmic objectives. “We want to identify the ones who really should be Airmic members but aren’t,” he says.
Airmic, Nicholas believes, is also on the side of SMEs. He believes it could be a real resource for companies without a professional risk manager or insurance buyer. They often do not have the muscle to get the full story about cost and value from their brokers or insurers nor fully benefit from the professional management of risk, he says.
Instead of fire power or even fireworks, therefore, this year for Airmic has been one of steadily building on work that is under way. “We don’t expect to have great changes in what Airmic does. We have our 10 year plan and we are sticking to it. The insurance market is steady, and there haven’t been many crises.
“At the same time, we are not standing still. We have broadened out from insurance with a lot of solid technical research and the Airmic academy is very successful.”
On the event of the 2013 conference and the end of his year as chairman, Nicholas is pleased with the steady increase in member numbers and the expected record number of participants at the 2013 event in Brighton. “We are continuing to get new members and to see new faces.”
Over the 50 years since it started, Airmic has come a long way. Just 22 people attended the inaugural meeting of this new association in December 1963.
Interesting, intriguing – and challenging
The year has been, Nicholas says, “interesting and intriguing”. He has enjoyed being at the heart of Airmic. “It has been great to be dealing with the board on the board issues and working with John Hurrell and his team.”
Balancing such an important role with his day job as group risk manager for BBA Aviation, a multinational aviation and aerospace services provider and FTSE 250 company, has been challenging, too, he admits.
The profile of the risk manager has risen with demands for better risk reporting starting with publication of the Turnbull Report on corporate governance in 1999.
The description risk manager covers such a wide spectrum of job descriptions from project managers to chief risk officers in highly regulated financial services businesses. Airmic can’t do everything for everyone who has a risk management responsibility, says Nicholas, but it tries to position itself to bring them together into a cohesive unit where it can provide information and add value.
He says that demonstrating the value of risk management remains difficult, because if it’s successful nothing has gone wrong and there have been no surprises. And it’s not a profit centre. With the growth in risk management in business curricula, he is hopeful that an appreciation of the valuable role of the risk manager will naturally develop within business leadership.
“This raises importance of recognition of a professional qualification. If Airmic can help attain chartered status for the risk manager through the Chartered Insurance Institute, it will be a bonus,” he adds. He is less convinced about the demand in the UK for European or international certification, currently under discussion by the Federation of European Risk Management Associations (FERMA) and the International Federation of Risk and Insurance Management Associations (IFRIMA) respectively.
In Nicholas’ eyes and experience the risk manager is a facilitator. “The CEO is the true risk manager. A lot of risk is operational risk which is fairly evident and it’s line managers and supervisors who have to manage these exposures while the strategic issues are for the board.”
Airmic can help produce material for risk managers to present when they get the two minutes in the lift with the CEO. “But it’s not going to take over the world,” he comments.
“I see Airmic sticking to its knitting. It will remain concerned with insurable risk and the people who manage it. There’s no reason why they can transfer some of these skills to others who have risk-related responsibilities.”
For this reason, Nicholas in unapologetic about Airmic giving attention to insurance: “I think UK companies get tremendous value from the insurance market for a relatively good price. It’s a tried and tested method of getting risk off your own balance sheet. Yes, there are claims that do go wrong, and they’re the ones that get publicity, but it works well most of the time. I don’t think insurers promote the value they add enough of the time.”
In very large businesses with strong balance sheets, insurance is in something of a transition from its traditional role. “We all bought fire insurance for the factory because that’s what you did. Today, the factory rarely catches fire, because of improved risk management, and perhaps the premiums would be better spent elsewhere on other, more significant, potentially insurable exposures.”
Risk managers are looking to insurers to cover the risks that are important to them today, but risk managers have to assess them properly before they can expect insurers to take the risks onto their balance sheets, he warns.
On Wednesday 12 June, Nicholas expects to hand over the chair of Airmic to Chris McGloin of Invensys, but he’ll remain on the board to maintain the continuity of leadership within the association. What advice would he give to Chris? “Enjoy the ride, as no sooner has it started than you are planning for the end at the Conference 2014! Early planning will allow you to develop and complete your chosen agenda.”
Lee Coppack is a freelance writer on risk and insurance topics.
Nicholas Bailey - Airmic Chairman