IoD and Airmic launch risk guide for directors

Airmic and IoD launch risk guide for directors

The Institute of Directors and Airmic launched their new guide to business risk at a seminar at the Willis Building in London. The publication urges Board members to improve their understanding and management of risk in order to successfully deliver growth and prevent future crises.

“Business Risk – A practical guide for Board members” features contributions from a range of expert authors from across business and academia, and makes the case that:

• Risk – and particularly strategic risk – are more important elements of a director’s job than they have ever been
• Despite large amounts of media space having been devoted to the allocation of blame for the financial crisis, there remains much practical work to be done hardening companies in order to prevent future risk failures
• Understanding how to assess risk at board level, and understanding how the Board should interact with risk professionals, are essential skills for all directors

The Guide seeks to inform nonexecutive directors about how to avoid pitfalls, gain access to crucial information and ultimately bolster decision-making in order to mitigate unnecessary or excessive business risk. It presents risk as an inherent and inevitable element of making decisions and developing a business – something to be exploited and controlled rather than avoided altogether.

The authors lay out in detail the roles and responsibilities of the board in assessing and managing business risk, the risk challenges currently facing UK businesses and the structural, personal and strategic solutions that can be used to address these challenges.

“Directors have a vital leadership role when it comes to risk management within their companies, which is often misunderstood. This guide helps to convey our message that risk management can help to facilitate profitable strategies as well as making firms more resilient,” Airmic chief executive John Hurrell told the audience.

He used recent events, including the huge fine imposed upon GSK in the United States and the unfolding LIBOR debacle at Barclays, to support the argument that the failure of risk information to reach board level – or for boards to act on that information – is a key cause of corporate failure.

Simon Walker, director general of the Institute of Directors, praised the role of Airmic in bringing risk issues to the fore and, specifically, for the publication last year of ‘Roads to Ruin’.

“If companies and the economy as a whole are to grow in today’s environment, it is vital that directors put risk management at the heart of business strategy. Understanding risk helps you to become more enterprising without jeopardising your business. On the other hand, take the wrong kind of risk and you are heading for disaster, whilst avoiding risk altogether means you are condemned to stagnation. This guide will help directors get this crucial balance right,” he said.

The publication is sponsored by Willis, Chartis and PwC, as well as the IoD and Airmic.

It is vital that directors put risk management at the heart of business strategy

Simon Walker, IOD