Digital revolution: Why it’s all change for risk managers

Digital revolution: Why it’s all change for risk managers | Insurance Business America

Digital revolution: Why it’s all change for risk managers

Walking the roads of revolution is not an option. Digital transformation of business models is a game changer for risk management, bringing great opportunity for those professionals able to rise to the challenge, says Julia Graham, deputy CEO and technical director at Airmic, the UK-based risk-management association.

Our recent annual conference, themed The Future is Now, addressed questions that risk managers everywhere must be asking: how does the so-called Fourth Industrial Revolution affect my organization? How does it affect my career? What must I do to play a full part in the exciting, fast-changing new business world?

And the general feeling was positive. Overall the digital transformation of business models should make the world more prosperous, and our jobs more interesting. There will be more need than ever for good risk management, and the basic principles of what we do will not change. Developments such as Big Data and Artificial Intelligence will provide useful tools – and are already doing so – but will not replace the need for people to exercise judgement.

This optimistic outlook, though, comes with a big caveat. There will be losers as well as winners. The winners will be those organizations and individuals who adapt, acquire essential new skills and develop the enhanced risk radar and awareness that the new world demands.

We used the conference to launch a report, researched for us by the CASS Business School, called ‘Roads to Revolution’. It addresses the question: ‘How are organisations transforming their business models to ensure resilience, value and growth in the digital age?’

It concludes that the risks associated with digital transformation can be addressed effectively given the right approach, and it recommends a way forward based on adapting and adding to principles of resilience that have proved effective in the past.

Despite this upbeat conclusion, it warns that organizations cannot continue to operate as they have in the past and expect to sustain their success. To quote the report: “Board members need to understand that organizational resilience alone is insufficient in the digital age. Continuous business model reinvention is necessary not just for future success, but for the very survival of the organization.”

As organizations change to exploit and adapt to the opportunities of new technology, good governance becomes even more important. The report states that legacy corporate governance principles and factors do not seem adequate to provide effective monitoring, strategy and legitimacy to organizations faced with digital transformation.

What goes for organizations goes for individuals. The unprecedented risks associated with digital advances can be managed. As a profession, however, we need to develop the relevant capability and outlook. Essential though traditional risk management skills will continue to be, if they are all we have then we will be relegated to the status of technicians.

In short, risk managers need to think and behave like business people if they are to have a strategic and influential role within their organizations. It has become a cliché to say we need to think and move outside our silos. But it is true now more than ever before.  We need also to acquire a sufficient understanding of technology and its changing business impact for us to have meaningful discussions with our boards, CIOs and CISOs. This will require an element of retraining.

Airmic is responding to these challenges on behalf of its members. Among other things, we now offer training and the chance to exchange knowledge at every stage of the professional journey, from those starting out to those already in senior positions. 

It is heartening to see the enthusiasm of the new generation of risk managers, supported by a bigger range of university risk management courses than ever before. The future is bright, but we need to be proactive and to exercise our imagination.