The impact of multiple ‘low frequency, high-impact’ risks calls for a new approach, says WTW’s Muhiudeen
Events in the last two years have shown us how multiple ‘low-frequency, high-impact risks’, take place almost simultaneously. This calls for firms in the region to adopt a culture of adaptability, said Clare Muhiudeen, head of Asia, WTW, in her welcome address at the RIMS-WTW Asia Pacific Virtual Risk Conference.
Acting decisively when shocks occur can help minimise disruption to business, she explained, adding that risk management was becoming a mainstream element of business decisions.
”The role of risk management has never been more important,” said Muhiudeen. ”In that regard, we are determined to play an active role in advancing the practice of risk management for organisations in Asia Pacific.
”That is why we’ve forged a three-year partnership with the Risk Management Society, or RIMS, to promote the development of risk professionals in the region and equip them to succeed in an evolving and challenging landscape.
The human element
Resilient organisations are those best able to bounce back from adverse events and able to continuously learn and strenthen their approach, she thought.
“Building resilience, therefore, requires a broad array of capabilities that are best addressed on three fronts: Financial, Operational and Human.
While there is a great deal of focus on managing financial and operational risk, the human element has been neglected, she noted, which is something that needs to change if companies are to thrive ‘even under the most trying circumstances’ and as the emphasis on better managing people risk grows.
“Human capital risk is an important element of the ESG framework,” said Muhiudeen. ”This has prompted boards to spend more time on human capital governance and oversight. But unlike many other risks, human capital presents a tremendous upside.
“People, teams and organisations often have unlimited potential for growth, creativity and productivity. As such, human capital involves both sides of the value equation: risks to be managed and mitigated, and performance and creativity to be developed and cultivated.”
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RIMS-WTW: Firms must adopt ‘culture of adaptability’