High likelihood, high-risk impact events are becoming more common, says RIMS president Ellen Dunkin

The Covid-19 pandemic has pushed risk management to the forefront for many organisations and presents an opportunity for risk professionals to “inspire change”, according to RIMS president Ellen Dunkin. 

Speaking at the opening of this year’s RIMS Australasia 2021 Conference, Dunkin said a “silver lining” to the pandemic was that leaders had “recognised the value that risk managers bring to the table, and they are ready to hear from you”.

Dunkin said risk managers often faced difficulties getting their voice heard, but said Covid-19 could become a pivotal moment for the industry.

“Right now, business leaders are listening,” Dunkin said. “They are ready to hear from you and ready to follow your lead. The risk profession can’t neglect the opportunity to inspire change,” she said.

The pandemic has underlined the fact that high likelihood, high-risk impact events were becoming more common, Dunkin said.

“Over the past twenty years, there have been three major “once in a lifetime” global shocks. 9/11, the 2008 financial crisis, and the pandemic. Each has caused years of economic disruption. High impact events are occurring more frequently than people care to admit,” she said.

“Before Covid, few organisations would have considered prioritising the risk of a pandemic, but we have learnt dismissing these risks is no longer an option,” she said.

Dunkin called on risk professionals to take global health crises into account when setting business continuity plans, and to ensure “low probability high impact threats are not ignored”.

Pivot to strategic risk management

She said a shift towards enterprise risk management would help organisations from a communications, legal, compliance, human resources, sustainability, and internal audit perspective.

“I think businesses are finally seeing the correlations,” she said, adding that companies including fashion label Tommy Hilfiger had benefited from an ERM approach during the recent crisis.

“The framework helped them to prepare to develop their business continuity plans. ERM also gave them access to information to perform scenario plans and stress tests,” she said.

“That organisations are having conversations about ERM is a sign of progress,” Dunkin said. “And it’s up to us to keep the momentum going, and that risk management remains a priority.”

“The risk profession should be scanning the horizon for the next big risk and next big innovation,” she added.

Mary Roth, chief executive of RIMS, said more organisations would benefit from the pivot to strategic risk management (SRM) from ERM in the years to come. Roth said there needed to be a greater alignment between risk and strategy.

A RIMS report, ‘Pivoting from ERM to SRM’, published in October 2020, underlined the benefits of a more strategic approach.

“SRM reframes risks, positioning them as opportunities rather than impediments. It links executives that are accountable for strategy with operational leaders,” Roth said. “And it assigns and establishes ownership; this is particularly important when trying to navigate emerging and dynamic risks.”

RIMS Australasia 2021: Don’t neglect opportunity to “inspire change”