Last month, Lloyd’s Register announced the sale of its Business Assurance & Inspection Services division to funds managed by Goldman Sachs Asset Management, a move which has established the division as an independent business, under the name LRQA. Paul Butcher (pictured), who has been named CEO of the new business, noted that the name was chosen to reflect the firm’s heritage and experience in the assurance and inspection market.
“The decision to sell was driven by a strategic review within Lloyd’s Register that identified that there was significant opportunity for both sides of the business, but this would require greater focus and investment to maximise the potential,” he explained. “In Goldman Sachs Asset Management, we have a globally admired business, who believe in our strategy and will back us to deliver it.”
One of the attractions of the business to Goldman Sachs was the strong alignment both businesses shared on strategy, he said, and while the direction of travel will not change, LRQA will move much faster. Being an independent business will create greater focus, allow it to be more agile and easier to do business with, as well as opening up new investment opportunities.
For Butcher, there is a fascinating symmetry to his latest step in his career, as the three distinct phases of his working life are now colliding - having started in finance, before moving into technology and then joining LRQA in January 2018.
“As our sector experiences rapid digital transformation,” he said, “there will be increasing opportunities to partner with clients to manage risk - sustaining growth, creating value for brands, minimising complexity and finding cost, time and administration efficiencies in the process.”
It’s interesting to see that c-suite executives are increasingly seeking out strategic partnerships that will help them manage their risk more effectively, Butcher said.
“I don’t believe the fundamentals of those relationships will change,” he said. “Our value will always reside in the quality of our people, the technical expertise we deliver and the integrity that we bring to our work with clients. What is changing, fast, is the way we offer our services. As a business, we have been very quick to adapt to the demands of the past 18 months through technology and our clients have been quick to see the benefits – embracing digital assurance and inspection where it is the right answer, but never at the expense of quality and thoroughness.”
As an independent business, he said, LRQA is now putting more focus and investment into its ambition to lead the industry in digital assurance - using technologies to deliver more efficient audits, inspections and cyber security services; using data to transform risk management; and recognising that assuring both digital and physical assets will be critical for the future.
The future of risk management is a question increasingly on the minds of many across the insurance and risk management space, especially in light of COVID. CEOs across the world are leading businesses that have undergone rapid change, accelerated by the events of the past 18 months.
Read more: Risk management after COVID
That experience has in turn hastened the shift from a compliance mindset, focused on meeting a minimum standard, to one of risk management and the ability to adapt, at pace, to changing circumstances. At the same time, he said, CEOs continue to face a set of fast-changing risks driven by global trends. The sustainability agenda is having an enormous impact across organisations and their supply chains as companies are held to account for their environmental and social impacts.
“Employee well-being – in particular in terms of mental health – is a major focus,” Butcher said. “And as the digitisation of the workplace and operations accelerates, cyber security is critical. The result is that growth, sustainability and ethics have become inter-connected for businesses. Customers are demanding ethically sourced products. Investors are looking beyond performance, to more responsible, transparent practices. Talent is gravitating towards safe, supportive and inclusive workplaces.”
Butcher highlighted that the decision by one of the world’s leading asset managers to acquire LRQA and the investment committed is a strong signal that risk management has high-growth potential. Inevitably, he said, there will also be more focus on risk-based assurance post-COVID as businesses reflect on the experiences and learnings of the past 18 months.
“But I see the growth opportunity in terms of a much more fundamental economic and societal shift,” he added. “For decades, our industry has helped companies use less, source responsibly, operate more cleanly, treat people better and keep them safe. Now, more than ever, to grow sustainably, every business must be able to track, manage and improve these facets of their operations and through a more data-led, technology-enabled approach, we can be the partner that enables them to do so.”
