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Using risk management to survive and thrive Paul Emery Head of Community and Social Organisations Zurich Tilden Watson, Zurich Risk Engineering ACEVO Conference.

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Presentation on theme: "Using risk management to survive and thrive Paul Emery Head of Community and Social Organisations Zurich Tilden Watson, Zurich Risk Engineering ACEVO Conference."— Presentation transcript:

1 Using risk management to survive and thrive Paul Emery Head of Community and Social Organisations Zurich Tilden Watson, Zurich Risk Engineering ACEVO Conference November 2011

2 © Zurich 2 Through the risk management maze Risk Expertise – Take full advantage of future opportunities – Confidence for commissioners supply chain – Enables innovation – Those that most effectively embrace manage risk (and have the capacity and resilience to take on more risk) will be the most successful Guide to help demystify risk management. We believe in keeping risk management practical and proportionate. This session will seek to explore some of the current risk challenges.

3 The resilience of others Living with risk? Surviving and thriving Threats to our resilience

4 © Zurich 4 What is Resilience? Business resilience: Having processes in place for planning, organising and controlling the activities of the organisation in order to minimise the effects of risk. Resilience: Ability to resist shocks ………or, to…….. ‘Bounce back’ quickly when the unexpected happens

5 © Zurich 5 Building a resilient organisation Surviving and thriving Managing risks Opportunity selection Setting an appetite Understanding and managing the supply chain Robust crisis management approach Business Continuity Planning (BCP) Corporate planning Being prepared

6 © Zurich 6 Quick exercise Group 1 – Charity sector risk view over the next two years (use template No 2) Group 2 - Charity sector risk view over the next ten years (use template No 2) Group 3 - (the positive group) opportunities over the next two years (use template No 3)

7 © Zurich 7 How do the results compare? Tough choices – Medium term view 1. Loss of funding / financial instability 2. Continuity and crisis response 3. Damage to reputation and brand equity 4. Comprise to charitable aims and purpose 5. Commissioning environment 6. Execution of organisational change 7. Short term decisions 8. Workforce planning and capacity 9. Governance failure and data loss 10. Gaps in the CSO network 11. Partner and supply chain failure

8 © Zurich 8 How do the results compare Global risks sixth edition Longer term view (produced in collaboration with Zurich) TOP TEN 1) Climate change 6) Energy price volatility 2) Fiscal crises 7) Geopolitical conflict 3) Economic disparity8) Corruption 4) Global governance failures9) Flooding 5) Extreme weather events10) Water security Interactive website: ONES TO WATCH Cyber security [online data /information security] Demographic challenges [age structure/ population growth] Resource security – commodities / energy challenges (volatility) Retrenchment for globalisation [protectionism] WMD [terrorists / geopolitical conflict]

9 © Zurich 9 Escalate if required Management co-ordination Becoming resilient a few thoughts 1.Using both risk and opportunity to inform your plans 2.Less is more - not quantity of paperwork [key messages and robust conversations] Remove jargon. 3.Up-skill Board Members to use / challenge risk information 4.Not just short term. Think longer term as well. 5.Nobody reads risk strategies. Define yours on one page?

10 © Zurich 10 Tangible benefits Credit ratings (S&P) Reduce “Total Cost of Risk” incl. insurance Less interruptions / resilience Inspection regimes satisfied (compliance) Industry groups Achieve objectives Risk management benefits (aka why bother?) Intangible benefits Consensus at the Board level Improved communication (down and up) Increased (internal) confidence in mitigation External confidence Focus and prioritisation now….as I was saying about risk management

11 The resilience of others Living with risk? Surviving and thriving Threats to our resilience

12 © Zurich 12 1 in 5 year event…… It will happen to you or your partners Capacity issues (e.g. flu etc) Power cuts Flood System failure Partner failure Accidents fuel

13 © Zurich 13 Supply chain understanding is a must * Derived from Cranfield University – Supply Chain Risk study LEVEL 2 Infrastructure LEVEL 3 Organisation networks LEVEL 1 Process LEVEL 4 External environment LEVEL 0 People Physical flow (logistics) Strategic (partnerships) Value creation (production) Examples Employees Regulatory, Exchange rates, Country, region issues

14 © Zurich 14 Quick exercise 1. Who do we fundamentally rely upon? 2. What examples of mitigation do we have in place?

15 © Zurich 15 Be prepared 1. Understand and manage your supply chain – they fail – you fail 2. Robust method for managing a crisis (how, decision making, recording, communicating) 3. Understand your key priorities within your organisation (what must you keep going versus areas you can stop)

16 The resilience of others Living with risk? Surviving and thriving Threats to our resilience

17 © Zurich 17 Fundamental - defining what risks to live with? Requirements for effective delivery Board buy-in / sign-off vital Set clear boundaries for escalation / reporting Set clear expectations down through an organisation Define risks that threaten objectives Define metrics e.g. performance, financial, reputational “The biggest risk you can take is not to take any risks” J.Guardiola {May 2011} “The amount of risk that an organisation is willing to pursue or retain” [ISO 31000]

18 © Zurich 18 Quick “academic” exercise ? Very high >90% High % Significant 5% - 30% Low < 5% Very Low < 1% Almost impossible <0.1% Negligible Marginal Critical Catastrophic You are going away as a group for a weekend in the Lakes …. Plot your groups appetite for risk (shade the squares where you are prepared to take a risk) Catastrophic = Death Critical = Loss of limb Marginal = broken bone (it will heal) Negligible = Scratches

19 © Zurich 19 Key messages regarding resilience…. Embed at the top table! Don’t just think short term Risk appetite can bring focus and set cultural tone Understand your supply chain Tilden Watson CPFA, IIA, MBCI Team Leader, Strategic Practice Zurich Risk Engineering UK Mobile:+44 (0)


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