1 The World at Risk Steve Fowler Chief Executive Officer The Institute of Risk Management December 2005

2 IRM – Who are we ? nProfessional education in risk management nPractitioner-led with strong links to leading universities and business schools n2000 members across 50 countries nSector independent – members from all branches of the risk profession nNot-for-profit organisation

3 Areas to cover today nThe World at Risk nEvolution of Risk Management nStandards nSkills and Qualifications

4 A World at Risk – geological disasters

5 A World at Risk – weather

6 A World at Risk – fire and explosion

7 A World at Risk – environmental contamination

8 A World at Risk – human failure

9 A World at Risk – terrorism and threat

10 A World at Risk – scientific uncertainty

11 A World at Risk – emerging new risks

12 A World at Risk – governance

13 A World at Risk - reputation

14 A World at Risk – social responsibility

15 A World at Risk – information systems

16 A World at Risk – fraud

17 A World at Risk – financial systems

18 A World at Risk – resilience & recovery

19 A World at Risk – supply chains

20 A World at Risk – projects and change

21 A World at Risk - achievement

22 The Risk Management wheel Risk Management Governance Risk Financing Business Continuity Reputation Ethics and Responsibility Personal Effectiveness Reward Political and Societal Risk Analysis & Statistics Information Risk Project Risk Physical Risk Control

23 So what is Risk Management ? nThe art and science of managing risk nCentral to strategic management nManagement of events & consequences related to opportunities (upside) and threats to success (downside) nIdentification & treatment nContinuous and methodical nIntegrated into the organisation, its objectives, culture, plans, procedures and accountabilities nLed from the top

24 A Risk Management Standard nNeed for an agreed: n terminology - relating to the words used n process - for implementing risk management n organisation and structure nEarlier standards had not fully addressed risk: n as opportunity, n had been very specific on process, n or had dealt with risk from one angle only

25 A Risk Management Standard nLaunched in September 2002 nIRM, AIRMIC and ALARM partnership nAdopted by FERMA nCommon risk language & understanding nNot box ticking approach nPitched at CEO level nTranslated into 14 languages nOver 100,000 copies downloaded

26 FINANCIAL RISKS INTEREST RATES FOREIGN EXCHANGE CREDIT STRATEGIC RISKS COMPETITION CUSTOMER CHANGES INDUSTRY CHANGES CUSTOMER DEMAND HAZARD RISKS CONTRACTS NATURAL EVENTS SUPPLIERS ENVIRONMENT OPERATIONAL RISKS REGULATIONS CULTURE BOARD COMPOSITION LIQUIDITY & CASH FLOW M & A INTEGRATION RESEARCH & DEVELOPMENT INTELLECTUAL CAPITAL PUBLIC ACCESS EMPLOYEES PROPERTIES PRODUCTS & SERVICES RECRUITMENT SUPPLY CHAIN INFORMATION SYSTEMS ACCOUNTING CONTROLS INTERNALLY DRIVEN EXTERNALLY DRIVEN Risk Drivers – an example

27 The Risk Management Process – seven key stages

28 Next steps with the Standard nSecond stage review underway: n review against COSO, ANZ 4360, PAS 56, OGC MoR, Basel II etc n review against users experiences n input into BSi and ISO work nFocus on principles, not how to nPoint to other sources of guidance nMore clarity on: n Scope of application n Benefits and objectives n Upside risk n People factors

29 Expert Professional Practitioner Awareness The Risk Education Pyramid……. Formal Qualifications Training Courses

30 Fellowship Diploma Certificate Management of Risk & Uncertainty IRM programmes

31 First Degree Programmes, ARM, PRM CRM x 4 (USA, Denmark, Singapore, India), CPRM Executive Programmes and Short Courses Higher Degrees, RIMS Fellow, EFARM …….and around the World

32 Thank you !