Dated: 29 June 2012
A new guide to business risk, published by the Institute of Directors (IoD) in association with Airmic, Chartis, PwC and Willis, urges UK Board members to improve their understanding and management of risk in order to successfully deliver growth and prevent future crises.
?Business Risk ? A practical guide for Board members? features contributions from a range of expert authors from across business and academia, and makes the case that:
- Risk ? and particularly strategic risk ? are more important elements of a director?s job than they have ever been
- Despite large amounts of media space having been devoted to the allocation of blame for the financial crisis, there remains much practical work to be done hardening companies in order to prevent future risk failures
- Understanding how to assess risk at board level, and understanding how the Board should interact with risk professionals, are essential skills for all directors
Risk is an inherent and inevitable element of making decisions and developing a business. The Guide seeks to inform non-executive directors about how to avoid pitfalls, gain access to crucial information and ultimately bolster decision-making in order to mitigate unnecessary or excessive business risk.
The authors lay out in detail the roles and responsibilities of the board in assessing and managing business risk, the risk challenges currently facing UK businesses and the structural, personal and strategic solutions which can be used to address these challenges.
The full report can be downloaded in PDF format here.
Simon Walker, Director General of the Institute of Directors, said:
?If companies and the economy as a whole are to grow in today?s environment, it is vital that directors put risk management at the heart of business strategy. Understanding risk helps you to become more enterprising without jeopardising your business. On the other hand, take the wrong kind of risk and you are heading for disaster, whilst avoiding risk altogether means you are condemned to stagnation. This guide will help directors get this crucial balance right.?
John Hurrell, Chief Executive of Airmic, said:
?Directors have a vital leadership role when it comes to risk management within their companies, which is often misunderstood. This guide helps to convey our message that risk management can help to facilitate?profitable strategies as well as making firms more?resilient.?
Alpesh Shah, Director in PwC?s Actuarial Risk Practice, said:
?There are few aspects of a board?s functioning that are as crucial to long-term corporate success as risk management. Organisations that understand the risks they face and can articulate their risk appetite and define their risk strategy accordingly can have better decision-making, greater agility and a sharper competitive edge. The practical points in this guide will be invaluable as Board members strive to achieve this.?
Nicolas Aubert, MD of Chartis in the UK, said:
?More than ever risk managers need to be represented on company boards to help protect not only their companies but, more importantly perhaps, Board members themselves from underestimating the risks and sanctions they personally face. This practical guide should help them raise their profile at the highest levels within their organisations.?
Daniel Wilkinson, CEO of Willis UK, said:
?Unpredictable emerging threats like cyber, reputational and supply chain risks require Boards to take a long-term focus on building resilience throughout their organisations rather than having a traditional risk management policy based solely on anticipation. The resilience approach will help companies respond quickly and dynamically to threats by ensuring that the right expertise and processes are in place.?
About the organisations involved
AIRMIC
Airmic represents corporate risk managers and insurance buyers. Its membership includes two-thirds of the FTSE 100, as well as many smaller companies. The association organises training for its members, seminars, breakfast meetings and social occasions. It regularly commissions research and its annual conference is the leading risk management event in the UK.
CHARTIS
Chartis is a world-leading property-casualty and general insurance organisation serving more than 70 million clients around the world. With one of the industry?s most extensive ranges of products and services, deep claims expertise and great financial strength, Chartis enables its clients to manage risk with confidence.
PWC
As the UK?s leading provider of integrated governance, risk and regulatory compliance services, PwC specialises in helping businesses and their boards create value in a turbulent world. Drawing from a global network of specialists in risk, regulation, people, operations and technology, PwC helps its clients to capitalise on opportunities, navigate risks and deliver lasting change through the creation of a risk-resilient business culture.
WILLIS
Willis Group Holdings plc is a leading global insurance broker. Through its subsidiaries, it develops and delivers professional insurance, reinsurance, risk management, financial and HR consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of some 17,000 associates.
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