As the AIRMIC conference opened in Brighton today its CEO has said risk managers are no longer in the back office.
As she launched the fourth publication in the association’s “Roads to” thought leadership series, focused on the concept of corporate purpose within a shifting business and risk environment Julia Graham said the risk manager’s role was now at the heart of an organisation.
“Over the last two years we have seen a visible change in the level of professional authority of the risk profession,” she said. “No longer residents of the back office, brought to the fore when an answer to a technical question was needed, but who now sit as trusted advisors at the shoulders of organisation leaders. This report will further support the profession and their business leaders in building sustainable and resilient organisations.”
“Roads to Repurposing”, examines what is being covered under the label ‘corporate purpose’ and ‘repurposing’, why these ideas have acquired such an urgency within the business world, and how companies are applying and using them to improve their business performance and manage risk.
The publication has been delivered in association with ACCA, Crawford, and Lockton, with the University of Oxford Saïd Business School as a knowledge partner.
“The idea that companies should have a clear purpose is not new,” the report said. “However, there has been a growing sense among executive teams that they should be able to articulate a shared understanding of why the firm exists and what the role of the business within larger society should be.
“At the same time, business responsibility has gone mainstream as a boardroom priority. Moving beyond Corporate Social Responsibility, responsible businesses are now responding to a broadening and deepening of the concept of corporate governance – both directors and shareholders are now being held responsible not only for the financial performance of the company, but also for its social, economic and environmental impact.”
It warned the business environment is likely to get more challenging as we go into what is shaping up to be one of the most volatile decades for some time.
“The aftermath of the first global pandemic in living memory and heading into a decade in which climate change and the shift to net-zero carbon will change the foundations on which our economies and businesses have been built,” added the report.
Expectations of companies were already on the rise but the scrutiny is now sharper than ever, it said. Corporations which have been seen to take public money, either directly or through broader industry-wide support, are now under increased pressure to ‘do the right thing’. The challenge for companies, then, is significant. However, there are also opportunities.
Becoming a purpose-led organisation can bring significant benefits. Those that have chosen to focus on goals other than profit and on stakeholders other than shareholders have often found that, over the longer-term, their performance actually improves.
“There is pressure from all sides to state or to clarify a corporate purpose, but there are payoﬀs too,” said AIRMIC. “This also brings a challenge for the risk management profession. Risk professionals cannot stand on the side-lines of this debate. They must lead and shape it in their own organisations.”
Anette Mikes, Associate Professor, University of Oxford’s Saïd Business School, explained: “This is an important crossroads for the risk profession. Risk managers have a mandate to foster genuine communications about risks in their organisations.
“They are in a pole position to take up the mantle of the purposeful organisation and develop the tools and facilitate the processes that can effectively help their colleagues live the purpose and priorities of their organisation.”