In recent years, the role of risk management within businesses has dramatically evolved, driven by increasing globalisation, rapid technological advancements, and unpredictable geopolitical developments. Organisations across sectors now operate within a landscape where threats emerge swiftly and unpredictably, demanding agility and strategic foresight to remain resilient.
With these challenges, the responsibilities and expectations placed upon risk professionals have expanded significantly. Risk management is no longer merely a defensive or compliance-oriented function but has become integral to strategic business operations, innovation, and competitive advantage.
Vince Gaffigan, executive vice president and director of risk consulting at Lockton, addressed the increased complexity faced by risk managers today. According to Gaffigan, interconnected global systems in finance, technology, supply chains, and energy, combined with geopolitical shifts and market volatility, have significantly increased the speed at which risks develop.
"The velocity of change has become a defining feature," Gaffigan said, adding that organisations that quickly pivot, absorb shocks, and efficiently reallocate resources often fare better.
Recent disruptions, including substantial tariffs imposed by the US, have intensified this environment of uncertainty. These measures disrupted supply chains globally, increased operational costs, complicated capital allocation, and heightened financial volatility.
"To thrive in this environment, risk professionals must expand their skill sets, adopt new tools, and play a more strategic role in guiding business decisions," Gaffigan said. "The ability to anticipate, adapt, and lead is no longer optional – it is essential."
According to Gaffigan, risk professionals today are expected not only to mitigate risks but also to identify opportunities and foster innovation. This includes recognising asymmetrical opportunities where focused, strategic decisions could yield substantial returns.
"Risk professionals are expected to mitigate threats, identify opportunities, and drive innovation," Gaffigan said. "This includes spotting asymmetries – where focused, strategic bets might produce outsized returns – and embedding risk insight into strategic decision-making and capital allocation."
Gaffigan also noted that this change requires expertise beyond traditional boundaries, incorporating finance, operations, legal, and technology. "It also requires that risk professionals and others foster deeper communication and collaboration across the enterprise," he said.
A notable challenge Gaffigan highlighted is the disconnect between strategic risk management at the C-suite level and operational risk management as understood by employees at the operational level.
Executives often perceive risk primarily through market forces, financial performance, and regulatory compliance lenses. Conversely, operational teams focus more on risks directly related to their specific day-to-day processes.
"The lack of a shared risk framework and language between these two critical stakeholders can impede information flow and the ability to recognise and respond to emerging threats," Gaffigan said.
Executives sometimes see risk management narrowly as compliance or insurance procurement, limiting a holistic approach to risk, volatility, and capital optimisation. Meanwhile, operational risk professionals might become excessively involved in tactical issues, losing sight of broader strategic goals.
"Risk management cannot operate in isolation or be bogged down by administrative burdens," Gaffigan said. "Functions such as data collection, claims processing, litigation, and contract reviews – while important – can drain valuable bandwidth from strategic initiatives."
Gaffigan suggested bridging the gap between strategic and operational risk management could help risk leaders significantly influence organisational change. Developing a unified risk vision enables executives to better grasp operational vulnerabilities while aligning operational teams with broader corporate objectives.
To achieve effective risk management in the current business landscape, organisations need to shift their mindset from viewing risk management merely as a cost centre aimed at mitigating losses to recognising it as a strategic growth and resilience driver.
"Executive leadership must champion risk management as a cornerstone of strategic planning," Gaffigan said, emphasising the importance of embedding risk awareness and oversight within organisational culture. "This involves defining risk appetite, identifying key risks, allocating appropriate resources, and seamlessly incorporating risk reporting into existing governance frameworks."
Gaffigan further highlighted the importance of organisations rethinking their relationships with insurers and brokers. Moving beyond transactional interactions to deeper, cooperative partnerships involving open dialogue, comprehensive data sharing, and mutual trust is vital.
"When price becomes the sole focus, organisations risk missing out on the resources, insights, and expertise of their partners," he said.
As the risk landscape continues to evolve, Gaffigan advocated ongoing investment in education, skill development, and innovation.
"Staying ahead of emerging risks and fostering adaptability allow organisations to turn risk management into a competitive advantage," he said.
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