The UK must learn to take risk again, Lord Mayor of London tells Airmic AGM

The UK’s financial services sector must regain its appetite for taking responsible risk if it is to grow, thrive and innovate, the Rt Hon The Lord Mayor of London Alderman Alistair King DL, told Airmic members at its Annual General Meeting, hosted by Airmic partner Marsh, in London.

While major crises such as the 2007 financial crash and the Covid-19 pandemic are in part responsible for a reduced risk appetite, there is also a more deep-seated cultural reticence, he believes.

“We’ve got out of the habit of being adventurous. There is no longer the appetite to get out there, knock on doors and see people in person. This is a cultural problem and needs addressing. We mustn’t be so afraid to fail.”

The Lord Mayor represents the City of London, promoting it as a global financial centre and supporting UK trade, investment and international standing. Speaking to Airmic News after the AGM, he noted that the City of London has a rich and successful history during which periods of upheaval and uncertainty were met with creativity and innovation.

However, with intensifying geopolitical headwinds and growing protectionism, the old order is passing away and, looking forward, he warned that a lack of entrepreneurial spirit is one of the major risks facing UK PLC:

“The defining capability that will separate leading financial centres like London from their competitors is not necessarily their size or their reputation, but their ability to manage risk.”

Risk and growth: tightly connected

Because of the tight relationship between risk and growth, chief risk officers and other risk professionals have a critical – and often underappreciated – role in unleashing potential, he argued.

“The CRO role is essential: they hold the authority to allow decisions to go ahead or not. CROs are not risk blockers but growth enablers, combining oversight with foresight to empower boards to take calculated and analysed risk well. 

“I would like to see them working more closely with CEOs to be strategic partners and support growth,” he said.

During his ten months in office, the Lord Mayor has raised the profile of the risk community, including hosting the first Chief Risk Officers’ Summit at the Guildhall in May and launching a Chief Risk Officers’ Network and Steering Group in November this year. Members that would like to find out more about the group can email aimee.burnham@cityoflondon.gov.uk.