Legislation should incentivise companies that embed risk management into their culture, says FERMA president Dirk Wegener

In their opening discussion at FERMA Talks, Charlotte Hedemark, programme committee chair, FERMA, and Dirk Wegener, president, FERMA, said the pandemic had raised the profile of the risk function within organisations, offering an opportunity to collaborate to improve resilience ahead of the next shock of crisis. 

Reporting on some of the results of FERMA’s new study, in which more than 60% said resilience was a top priority or very relevant in strategic decision-making, Hedemark said most participants identified the executive team and risk function as responsible for resilience in their company.

“This suggests the risk function is taking more responsibilities now - especially in coordinating with other functions across the organisation,” she added.

“They are well equipped, but more work needed to make this a truly strategic priority. Three quarters of risk managers state there is a clear need for improvement in risk culture and strategic process in their organisations.”

The COVID-19 pandemic has demonstrated that we must not be complacent. “We continue to face other risks, such as climate and cyber, so we are prepared for future disruptions whatever the cause,” said Hedemark.

She thought there was room to improve capabilities around predicting future shock events - to scenario plan and stress test potential outcomes.

“We need more anticipation and preparation for the next crisis,” agreed Wegener. “The emphasis should be on prevention rather than on post-crisis response.”

“So legislation should incentivise companies that embed risk management into their culture, as this reduces the impact of an event and also the economic damage.”