Case study: How Westfield used risk co-ordinators to champion risk management globally

Risk managers must not only track a wide variety of risks, but also keep a close eye on risks that may be dispersed throughout their business locations and indeed throughout the world.

This will vary by organisation, but for those with an expanded global presence especially, it poses a major risk management concern.

For risk managers in retail, this may mean managing various stores and outlets. For those in aviation, it will involve different airports and countries.

Almost any business with an expanded global supply chain faces the difficulty of managing across time zones and cultures. Yet firms often only have one single, centralised team (or even just person) to handle everything.

A risk approach that is too centralised does not allow for the expansive nature of risk to be covered. Having eyes on the ground should be an essential component of a fully fleshed-out risk strategy.

YOUR PEOPLE ON THE GROUND

In the mid-90s, Eamonn Cunningham, then chief risk officer with Westfield/Scentre Group, knew he needed a solution to this problem. He was overseeing the company’s considerable retail empire and needed better coverage of the risks the company faced.

His solution was what he termed “risk management coordinators”, deployed at various locations to provide risk management in a more localised manner.

“Where you have a number of operational locations, it is important to ensure that you have people on the ground to advocate the ‘risk aware message’ at each location globally and make sure that it has a heartbeat,” says Cunningham.

“If you do not have these people, then risk as a topic will easily fall foul of the notion: out of sight, out of mind. At our shopping malls and construction sites these were full-time roles and, depending on the size of the location or project, you could have two or more risk management coordinators on site,” he adds.

“At a corporate office level in each country, I had enterprise risk management coordinators and business continuity coordinators”

Cunningham explains that at an operational level, these coordinators are responsible for “all things risk management,” in particular oversight of health and safety, or as it was called in Westfield, “life safety”.

“This included carrying out regular inspections, dealing with incidents and their follow-up, and the usual periodic reporting,” he says.

“At a corporate office level in each country, I had enterprise risk management coordinators and business continuity coordinators embedded into each of the major departments and business units.”

All of these roles maintained a solid reporting line into local or departmental management but with a dotted line into the risk management function in each country.

“It was a case of sitting down and talking with local management so they got a clear explanation as to why the role helps them in the first instance.”

Cunningham said that when the overall position structure was established, it was necessary to ensure that local management understood and accepted the need for it.

“It was useful in the first instance to have unfettered support from the most senior leadership within the organisation for this role. However, when you had a change of local management, repeating the very strong message of support from on high was not the way to tackle any resistance to the role itself,” he says.

“Rather, it was a case of sitting down and talking with local management so they got a clear explanation as to why the role helps them in the first instance.”

Cunningham says most resistance evaporated when this was clearly understood. “Interaction between risk management coordinators was important and in most countries we had annual conferences where all coordinators got together. This ensured that the message provided at each location was consistent.”

MEASURING SUCCESS

Like all things risk management, the evaluation period needed to be rather long, he says.

“Over time you would identify some positive trends if things were going as planned or otherwise. You need to be careful not to create an overtly numeric approach to evaluation. It just does not work and invariably you would have a low confidence level associated with the interpretation of any trends.”

Instead, Cunningham says he adopted a more subjective approach.

“A favourite question of mine, when visiting a location, particularly when you have a new local head, was: ’What’s happening on the risk front?’ If the response was a blank stare, then you knew you had a problem.”