Risk managers are becoming more visible and active across their organisations and are wielding greater influence on strategic decisions, according to a senior executive at Marsh, an insurance broker and risk advisor.
Alex Moczarski, President of Marsh’s International Division, says that recent events highlighted the need for a more enterprise-wide approach to risk management. Moczarski adds that while management of individual hazard risks had historically been viewed by many firms as an “ancillary operational function”, the global financial crisis and the Chilean earthquake illustrated the growth of interdependencies within organisations and world economies.
“With companies focusing less on ‘insurance’ and more on risk management, the role of the CRO [chief risk officer] within organisations has become more crucial. This is especially true since risk and governance issues became more prominent during the global financial crisis,” observed Mr Moczarski.Boards of directors, CEOs and risk professionals are now paying more attention to historically non-insurable strategic and operational risks, including those arising out of mergers and acquisitions. In addition to such expanded responsibilities, the purview of the risk manager is also growing. Moczarski says: “Risk managers are increasingly playing a role in divisions that have traditionally operated in ‘silos’ separate from other operations, including treasury, health and safety, business continuity, human resources, compliance, and information technology.
“Risk managers are increasingly focusing on counter-party risk involving key suppliers, joint venture partners, insurance carriers and others whose financial and operational performance are of significant importance to the firm. Alignment of risk management, operational excellence and corporate governance has enabled risk managers to influence the thinking and direction, and ultimately the culture of the organization,” Moczarski adds.
As the role of the risk manager evolves, Moczarski also notes the growing availability of analytic tools to identify and quantify organisational risks.