DVS 2013: Managers warned off silo approaches

Risk managers should steer clear of silo approaches to risk management, Siemens Financial Services head of risk financing and strategy Holger Kraus advised, ahead of the DVS conference in Munich.

He said:“The main risk is having too narrow a view of risk – for example, just from an insurance, corporate governance or regulatory perspective.

“Risk will be a pre-eminent issue in business going forward. To deal effectively with an adequate risk culture is at least as important as mastering methods, models and financial products.”

Change of emphasis

He added that the differentiation between insurable and non-insurable risk will become less and less relevant.

“Managing the volatility and tail risks of the corporate risk portfolio using a combination of different financial, contractual, engineering or other measures will prevail.

“Companies will need to consider which level of return they expect and which degree of risk– or volatility – they are willing to accept to achieve these returns.

“So I would see the perspective change from root cause analysis – for example, a given risk such as cyber – to an analysis of causes of volatility on a portfolio level that exceeds a threshold defined as acceptable.”