What are the risks keeping European risk managers awake at night?

This year’s Federation of European Risk Management Associations’ forum gathered risk managers from across the world in Berlin to discuss the biggest risks, challenges and opportunities facing risk professionals. Dirk Wegener, who took up the role of President of FERMA during the forum in November, tells us how the association is helping risk managers and their insurer and broker partners to increase understanding and boost the profile of risk management.

What are the biggest risks keeping European risk managers awake at night?

Understanding the issues that risk managers are concerned about is one of our key roles as the association of European risk management associations. To that end, we conduct an in-depth study every two years to find out what it is that risk managers are thinking about. The results of the most recent of those studies, our European Risk Management Report 2018, informed our program of sessions and discussions at the recent forum and gives valuable insight into what is preoccupying risk managers.

The study revealed that 37% of risk managers consider cyber threats to be the main risk to their company’s growth prospects; interestingly, this risk was ranked the seventh biggest threat in our last study in 2016. This clearly indicates that cyber is a very big issue and one that continues to grow in importance.

The two other major concerns are somewhat linked – uncertain economic growth was cited as a top risk by 31% of respondents, while 30% identified geopolitical uncertainty as a key threat.

Three new risks entered the top ten in the 2018 survey: speed of technological change; availability of key skills; and climate change and environmental damage.

Digitalisation and sustainability themes are, therefore, key priorities for FERMA and were major discussion topics at the forum. Our aim is to give risk managers state-of-the-art knowledge to be able to discuss these topics internally, with their C-Suite, their overseas subsidiaries, heads of departments and all their other key stakeholders.

How is FERMA helping to advance the understanding of, and dialogue about, these risks?

Events like the recent forum provide the opportunity for lively discussion on these topics – it was a really vibrant event that left us all with plenty of food for thought.

As FERMA, we have two major missions: to serve our member associations and promote the profession in Europe; and to produce knowledge and act as a catalyst for ideas and expertise.

We do this in various ways, including advocacy work with the European Union institutions and stakeholders. We produce regular reports and publications on topics of interest to our members – recent examples include guidelines on cyber insurance and risk management and captive insurers post the OECD/G20’s framework on base erosion and profit shifting. FERMA also organises regular networking and educational events, such as our forums and seminars, and webinars on topics like cyber and environmental and social governance. We also produce regular newsletters and special newsletters on pressing topics such as the UK’s exit from the European Union, and maintain an active online presence.

How important is FERMA’s educational role in helping to increase knowledge about risk?

Continuous education is, we believe, hugely important for risk managers to increase and sustain risk knowledge.

Our FERMA RIMAP European Risk Management Professional Certification enables risk professionals to stay on top of the latest risk management trends. We aim to set a recognised standard of quality and create a community of risk professionals. More than 165 risk professionals have now become certified under the program, and several will sit the RIMAP exam during the forum in Berlin. We also held a RIMAP masterclass for interested participants during the event.

Our seminar, which takes place every other year, also has a strong focus on education and knowledge sharing.

What progress you think has been made in raising the profile of the risk manager – and risk management – in Europe? What is FERMA doing to further raise the profile of risk management?

There is no doubt that risk, and the management of risks, is growing in importance for organisations of all types across Europe.

One of our primary roles as FERMA is advocacy and lobbying to ensure that the risk management voice is heard when legislators are making rules or debating issues.

An example of this work includes our appointment as the sole representative of the corporate insurance buying community on the Insurance & Reinsurance Stakeholder Group of the European regulator, the European Insurance and Occupational Pensions Authority (EIOPA). One of our recent successes in this role was to put the issue of proportional treatment of small insurers, including captives, under Solvency II on EIOPA’s agenda.

During my presidency of FERMA we will continue this advocacy work, especially in light of the upcoming 2020 EIOPA review of Solvency II.

We also have forged a strong working relationship with the OECD on issues surrounding the tax treatment of captives, among other things.

Ahead of the European Parliamentary elections held in May this year, we prepared a FERMA manifesto, presenting our priorities for EU policymakers. This manifesto will form the basis of our discussions with EU leaders and support our aim to garner greater political support for the development of professional risk management within organisations of all types across Europe.

How important is the role played by FERMA’s strategic partners in helping to boost the understanding of risk?

Part of our strategy to achieve our missions is to take the lead with stakeholders that have an interest in risk management. We have a long-term partnership with six international insurers and brokers, of which AXA XL is one.

These partners act, in a sense, like a scientific committee to support the risk management profession in Europe. We value the ability to tap into their knowledge, expertise and experience.