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Risk management starts at the top
Effective risk management in a large company starts at the top with the board and executives and is not the sole domain of a chief risk officer (CRO) and the risk management team, a risk specialist said.
Speaking at yesterday’s Institute of Actuaries Enterprise Risk Management conference, Michael Thornton, group chief actuary and chief risk officer, AXA Asia Pacific, said risk management needs to be embedded into the corporate culture.
“We’ve got to make sure we get the tone at the top right. If I can’t get the board and the executive team singing from the same hymn sheets there’s absolutely no way I’m going to be able to cascade key messages down to lower levels of the organisation,” Thornton said.
There is the potential for risk management to be seen as just another layer of bureaucracy so it is also important for a CRO to be able to communicate well, he said.
“To be effective as a CRO you need to be comfortable and engaged with the chief executive officers and boards and you need to be able to speak to them in terms that they can understand,” he said.
“All too often we get stuck in the details, focus on the models and their limitations and all too often we lose the audience. We need to be able to read our audience and speak a language that resonates with them.”
Risk management is not just about specialist teams and complex modelling, but also having sound practical processes operating across key decision making processes, he added. If this process is working well it will be so embedded staff will not even realise they are being risk aware, and risks will be identified and managed up front, he said.
AUTHOR
Mike Taylor
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