Australian risk managers voice growing concern about ‘disruption risk’

Australian risk managers are increasingly concerned about the threat of disruptors to their business.

This was one of the key areas discussed at the StrategicRISK Knowledge Live event in Sydney last week, which was attended by more than 50 risk and insurance professionals.

In a live audience poll, 79% of delegates said that ‘disruption risk’ or ‘failure to innovate’ was on their risk register and 97% were ‘concerned’ or ‘very concerned’ about the threat of disruptors to their business’s future success. In an Asia-Pacific wide survey that asked the same question, only 73% of risk managers said the disruption risk was on their register.

“If your rate of transformation is slower than the industry that you are in, you are in real trouble, you are on borrowed time. Risk professionals have a real role to play in dealing with this,” said Marco Ciobo, managing director and leader of the Technology Strategy practice (ANZ) at Accenture Strategy. “It’s not about mitigating and avoiding risk, it’s about embracing some risk to create some value.”

Fellow panellist, BPAY group risk manager Francesca Dickson, agreed.

She said a big challenge for risk managers was to “cut through the hype and understand the real threats… shaping ideas, not just following and defending.”

Zurich Asia-Pacific chief risk officer James Myerscough added that it was critical for companies to “understand what they actually deliver to the customer”.

“Otherwise someone else will work it out,” he warned.

Pace of change

Accenture’s Ciobo said today’s competitive landscape had been reset by digital technology, emphasising “the absolute criticality of the risk function in strategic thinking”.

“Ongoing change is the new normal,” he added. “[So it] works well when both strategists and risk professionals understand we are not dealing with static models.”

The audience agreed: when asked which technology they thought would have the greatest impact on their business in the next two years, The Internet of Things and increasing automation and robotics tied for first place with 39% of the votes each, followed by artificial intelligence/virtual reality at 14%, and 3D printing and blockchain both on 4%.

In order to embrace these technologies and the pace of change, the risk function should be engaged with the strategy function said Brambles vice president, strategy and planning, Ben Heraghty, who sat on the morning’s panel. “Somewhere, someone is thinking about how to disrupt your industry,” Heraghty warned. “The question is, do you get ahead of it or do you ignore it?”

Lend Lease group head of risk and insurance Kevin Bates said he was lucky to work closely with his company’s strategy team.

“It is about making sure that when the business is aiming to achieve its strategy that we’re working to mitigate the key risks as best we can so that we’re not the ‘handbrake to happiness’,” he said.