Building a 'risk culture' amid strong headwinds

Building a 'risk culture' amid strong headwinds | Insurance Business America

Building a 'risk culture' amid strong headwinds

Second of two parts – read the first part here

As airports, especially in Asia, continue to be exposed to soaring risks, Willis Towers Watson’s Kevin Snowdon (pictured left) and Jago Harvard-Walls (pictured right) discuss the need to build a risk culture among airport stakeholders and what these risk managers and stakeholders can expect in the future.

According to Harvard-Walls, while there’s no lack of passion among risk managers in the industry, he found that most organisations hold their risk managers accountable for the entirety of risks. To rectify this, Willis Towers Watson encourages risk managers to interact with other stakeholders across the business.

By bringing together all the stakeholders (e.g. airport operators, business continuity planning, security, emergency services), it creates a forum which has a true understanding of the risk exposures of the business.

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“That’s really important, because then you’re in a position to truly assess where you are at,” Harvard-Walls continued. “Without that kind of insight, you’re not in a power position to truly understand the next steps you must make. What we’ve done with our clients is build a ‘risk culture’ within the business, so that everyone understands its importance and that risk is not a stagnant factor but instead is an evolving situation.

“By building this culture, and a common understanding and language within the business, it allows it to be in a stronger position to translate that back into the insurance market and get the best terms and build a better relationship with insurers. It’s an important collaborative exercise that shouldn’t be left solely on risk managers’ shoulders.”

He cited a recent event in the Netherlands where Willis Towers Watson brought together various stakeholders – airports, third-party experts, legal, adjusters, government advisers – to offer insights and challenges faced by airports as a result of the increasing risk of terrorism.

“What we’re trying to say to our clients is: “We don’t have all the answers, but we want to bring you a collective where we can discuss openly the challenges and connect you with third parties that understand the specifics and the challenges,” said Harvard-Walls. “Because if we can communicate and collaborate, it means that we can push the insurance industry to be much more specific to our needs.”

What does it mean for the future?
According to Snowdon, the industry can expect a more structured approach to risk assessment, being aided by technology.

“Based in Singapore, I think we see some very sophisticated approaches,” he said. “But across Asia, we see a very wide variation in maturity of risk identification, assessment, evaluation, and mitigation. It’s our remit to try and take the best examples of what we see across the region, and share that. In effect, risk and insurance can only develop when it has a systematic approach to risk management. Here in Singapore, we’re seeing smart terminals, particularly Terminal 4 at Changi.”

Harvard-Walls brought up one component that is overlooked: the organisation’s people.

“It is important that the risk manager is also talking to the HR team or the organisational transformation team. Alongside evolving your airport terminals to adopt AI, you must also transition your people,” he said. “One of the great things about the Singapore government, is that they’ve been very forward-looking. It has developed the SkillsFuture programme and they have identified key sectors in which they want to invest in educating their population building those university programmes and we’re very lucky that we’ve partnered with them for the aerospace initiative.”

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Snowdon, on the other hand, highlighted what could be the largest looming threat to all communities and industries – climate change.

“With airports, one of the key aspects is climate change and natural catastrophe, not just today but even in the next few decades, as these projects are certainly built to last,” he said. “Designers are taking in to account predictions about climate change. Nowadays, these airports are built significantly higher than old runways to account for rising sea levels. Climate change is a critical risk to understand, predict, and build into the infrastructure today, for what may be an exposure that will not materialise for the next 30 years. These factors must be accounted for today, or else the retrofit of climate protective measures would be just far too expensive at a later date.”