Welcome to our very special ten-year anniversary edition of StrategicRISK
It was over lunch in a London sushi bar in early 2000 that then chief executive of AIRMIC, David Gamble, and professional writer Lee Coppack conceived the idea of a new publication for risk managers. The inspiration was prompted by the publication of the Turnbull guidance in 1999 which set out best practice on internal control for UK listed companies and the Combined Code on Corporate Governance which followed on the heels of the Cadbury, Greenbury and Hampel reports of the 1990s. All of these reports had been attempts to address some of the internal corporate governance failures and resulting scandals that had hit British companies, notably that surrounding disgraced entrepreneur Robert Maxwell at the start of the decade.
With the backing of publisher Newsquest Specialist Media (then called Southern Magazines), StrategicRISK was launched in June 2000 at the AIRMIC conference in Birmingham. I was fortunate enough to be appointed editor following a career which most recently had included more than 20 years working with the Financial Times, first as an in-house editor of World Insurance Report and then as a freelance consultant editor on the FT’s insurance newsletters and an author of several FT management reports.
Despite a largely insurance writing background, I was determined that StrategicRISK should take a broader view of risk. At that time the risk management thrust was for an ‘holistic’ approach, increasingly being repackaged as the enterprise risk management concept of today. I like to think that StrategicRISK has always looked holistically at risk, covering insurance where appropriate but relating it to the far wider concerns of many risk managers who view it as just one of the instruments in their tool box.
The initial promptings for publishing StrategicRISK stemmed largely from UK corporate governance moves. However, it soon became clear that the magazine would play a particularly useful role in translating the impact of the many new regulations that European countries were introducing, often as a result of European Union directives.
With the decade also seeing more European companies embracing globalisation, it was not only EU regulation that they had to take into account. There was a common view that any company that wished to be taken seriously as a global player should have a presence in the USA. And the latter faced its own share of corporate scandals, with Enron in 2001 and WorldCom in 2002. The result was the somewhat hurried introduction of the US Sarbanes-Oxley Act of 2002 whose stringent requirements affected – and cost - many European businesses.
It was not just on the regulatory front that the massive trend towards globalisation posed new risks. Sourcing supplies from emerging markets such as China in order to reduce costs led to control and cultural issues. Offshoring administrative functions and call centres to countries like India raised data protection problems as well as creating employee relations issues in home territories. Selling to new markets that were growing in wealth stimulated demand but raised questions of credit worthiness.
Alongside these globalisation risks came greater use of the internet and technology by both businesses and individuals around the world. While the internet proved a wonderful tool for trading, changing the way in which many companies operated, it too brought its share of risks with cyber crime, identity theft, malicious hacking – and the rest.
The internet has also provided a platform for lobbyists, activists and pretty much anyone who has strong views on anything to air their opinions to a very wide audience. With the growing focus on corporate social responsibility during the decade, this meant that news of any perceived breaches in corporate ethical behaviour was quickly disseminated throughout the world. Many companies learnt that a fast and honest response was the only way to deal with criticisms. ‘Sweeping them under the carpet’ was no longer an option in the age of internet transparency.
Wider issues like war and political unrest, fluctuating energy prices and global warming have additionally taxed companies in the last 10 years. But it is undoubtedly the recent banking crisis that has highlighted just how risky today’s world is. This, along with some notable frauds and incidents of rogue trading, would appear to make a nonsense of all the regulation and increased supervision that came into place during the decade. However, perhaps one should ask whether the problems might have been a lot worse without the increased level of corporate policing?
This fairly brief skim through of some of the main risk issues of the last decade suggests that risk managers have had their work cut out to keep pace with the challenges. Undoubtedly, some have been relegated to, or remained in, the role of purely insurance buyer. Others have had the opportunity to grow in stature within their companies, and these will be the chief risk officers of the future, if indeed they do not already have that title.
With the huge focus on risk that has occurred in the last 10 years, I believe that we launched StrategicRISK at a very opportune time. During the decade, we have had the privilege of getting to know, and understand the views of, some of the top people in the risk management profession. I very much appreciate their support and guidance.
When we first published StrategicRISK, it was as a quarterly publication. Now it is bi-monthly, also holding a wide range of special events, publishing conference daily newsletters and providing its audience with a valuable online news service. And all this started with a conversation in a Japanese restaurant!