How should the risk profession keep pace with the fast-changing external environment? How can businesses address the climate crisis at an operational level? And how can risk professionals exert more influence individually within their organisations?
These are just some of the questions debated and discussed at Airmic's sell-out ERM Forum last month - a one-day conference for risk management professionals, focused on the most pressing, challenging and topical issues in enterprise risk management.
Does your business know its purpose?
The businesses that will thrive in today's fast-changing environment are those which "understand their purpose", according to keynote speaker James Arroyo, director of the Ditchley Park Foundation.
In his opening address to delegates, he warned that technology is driving change with such velocity that "we are in an exponential moment" which has huge implications for risk management. "When timings get shorter, risks can accelerate and accumulate far quicker," he explained.
He used geopolitics as the most notable example. With the rise of China and its technological dominance, the world "will no longer tilt towards the US quite so clearly". This will challenge multinational companies who find themselves dealing with competing models for how to run an economy and how to run a business.
"Businesses struggle to answer this question"
Agility - the theme of Airmic's conference - becomes more important than ever before in this climate, but "an agile response to risk means making big trade-offs", whether making spending decisions or accepting inefficiencies, Mr Arroyo explained. Crucially, the right trade-offs can only be made if leaders understand what the essential core of the business is:
"You cannot be agile unless you know the key thing that you have to protect…The biggest risk for businesses is that you lose your sense of purpose. You will be surprised at how many businesses struggle to answer this question."
Climate change: beware shifts in social norms
Delegates received a stark warning on the business impact of climate change and habitat loss from climate expert, Dr Robert Muir-Wood, who described the environment as a "slow burn but existential crisis" that should be taken seriously by all boards.
After providing an overview of the latest climate change science, Dr Muir-Wood, who has been chief research officer at RMS since 2004, warned that shifts in social attitudes could pose just as big a risk to businesses as the physical impact of climate change.
Noting the impact of 16-year-old climate activist Greta Thunburg, he said the climate "is driving change and behaviour" in such a way that social norms are fundamentally changing. What is considered acceptable today may be unacceptable in just ten years' time, with potentially severe consequences for some businesses.
Source: Dr Robert Muir-Wood, RMS, presentation at ERM Forum, 2019
And the secret to successful communication is…
“If you are a millennial, the chances are you will look at your phone at least 150 times every day. That’s about once every five minutes in your waking day,” communications expert and keynote speaker Darren Briggs told delegates. Research shows, he added, that millennials have an attention span of just 1.9 seconds.
So how, in this world of information overload and short attention spans, can we influence and persuade in a business context?
According to Mr Briggs, we persuade with facts and influence people with emotion. Successful communication requires both. Mr Briggs, who has spent the last twenty years working with boards and corporate communication teams at some of the world's best-known brands, said he has three golden rules: be authentic, keep things simple and be concise.
And always remember, as Albert Einstein said, “if you can't explain it to a six year old, you don't understand it yourself.”
Airmic's ERM Forum, a one-day conference on enterprise risk management took place at etc. Venues, Fenchurch Place, in London on 9 October.