June 7, 2016 by Canadian Underwriter
Organizations need to take some risks, and risk managers need to understand the value of taking such risks, Risk and Insurance Management Society Inc. (RIMS) said in a report announced Tuesday.
“Usually risk is defined as the possibility of loss or injury, but the idea of risk is more complicated that than,” wrote Jessica Wasserman, assistant compliance officer at New York University and a member of the RIMS strategic risk management development council, in the report. “Risk can result in positive or negative outcomes so a more neutral risk definition would be ‘an objective that is accompanied by uncertainty.’”
The report is titled Risk Taker vs. Risk Manager: Building a Bridge Between Strategy and Risk Management.
Wasserman cited several high-profile incidents – including the failure of firms such as Enron and Bear Stearns – as well as the Deepwater Horizon offshore oil platform explosion.
“Despite all this focus on risk, there remains a gap that goes unnoticed or untouched by many risk managers: the positive side of risk,” Wasserman wrote.
Changes in the marketplace and workplace – such as disruption from technology developments – are “requiring executives and their organizations to take more risks,” she wrote in the report.
There are “concrete actions” that risk managers can do to help “bridge the two roles” of risk manager and risk taker,” she added.
The report “explores the goals, responsibilities and the value of collaboration between those in the organization charged with pursuing new opportunities and risk professionals,” RIMS stated Tuesday in a release. “With examples and best practices from leading organizations, the report provides strategies for risk professionals to develop successful relationships with both strategic and operational stakeholders.”
Some of the companies used as examples include McDonald’s and LEGO. McDonald’s, Wasserman suggested, took a risk when it launched its McCafe service.
Executives, such as McDonald’s CEO Steve Easterbrook, “understand that taking risks is an important part of their roles as leaders within their organizations,” she added.
“All too often, risk managers rely on direct value that stems from having a risk management or enterprise risk management function that is concerned with protecting the organization from downside risk and thinking about the issues that others do not want to think about.”