Risk management is more important now than ever

Risk management is more important now than ever, according to Lord Hunt of Wirral. He said the collective failures of US subprime mortgages and Société Générale have pushed financial markets to the brink of a global recession. ‘These financial impacts mean that risk management has become very important to governments globally.’

Both of the crises suggested that risk management was being overlooked, argued Lord Hunt, a fellow of the Institute of Actuaries and an honourary fellow of the International Institute of Risk and Safety Management. Referring to the lending rigour of US subprime mortgage providers, he said: ‘Risk management in each of the organisations concerned must have identified the risk of lending money to people who would not be able to repay, but those risk managers must have been overruled.’

In a similar vein and with reference to the SocGen fraud, Lord Hunt said: ‘The systemic risk should have been obvious, but blind eyes were turned and the risk managers were ignored.’

Looking ahead to the 2012 Olympics, he said: ‘Risk management has a key role to play in ensuring all the central infrastructure for the London Olympics is completed on time.’ ‘Better risk management is the answer to all of these problems,’ said Lord Hunt, who was addressing a Risk Federation conference.

To take advantage of the opportunity, Lord Hunt called on the risk management community to argue for better risk management. ‘With an evidence based approach it is legitimate to ask if risk management is being taken seriously enough by senior management. ‘You must find a way to speak with one voice,’ he said.