With global conflict, political and economic uncertainty, bushfires, storms and flooding in the headlines, IRM has surveyed some of its senior members across a range of sectors and geographies for their risk predictions for 2020. (Please note the view expressed below reflect the individuals rather than their company views.) Here is a selection of those views.
The key individual risks charities will be tackling in 2020 – as identified by IRM’s Charities SIG team – include raising and/or maintaining high quality safeguarding standards, establishing the right risk culture within the organisation, and tackling emerging risks in a more systemic and less reactionary way. All of this can be summarised as “building risk resilience” and taking an “agile” approach to cope with the ever-changing needs of society.
Alyson Pepperill, CFIRM chair of the IRM Charities Special Interest Group and Client Projects Director at Arthur J.Gallagher.
Neither insurers nor risk managers will commit to research at the level and depth required to reach a clear consensus as to the problem and the short and medium term solutions to protect assets and businesses. Public perception will increasing continue to lead opinion and raise demands for removing the causes of climate change. Profit, pragmatism and other practicalities will dampen, deter and delay initiatives by organisations, industry sectors and governments. IRM’s Climate Change SIG is in the process of establishing its role and remit.
Paul A J May CFIRM, Chairman of Concordia Consultancy Ltd, a member of the IRM Climate Change SIG and a former IRM Board Director.
BREXIT can now be treated as a certain outcome and therefore maintain its position as a topical concern for the UK construction industry. The reinstatement of border controls will most certainly impede the free flow of construction materials into the UK and disrupt ‘just in time’ deliveries. Further, already constrained megaproject schedules will have to adopt innovative methods to absorb these delays and maintain expected completion dates. However, now that three years of economic uncertainty is nearing an end, it is likely that the newly-installed government will turn on the infrastructure spend, especially as it is a prominent manifesto pledge.
Vinay Shrivastava, CFIRM, Director, UK Infrastructure Risk Management, Turner and Townsend and Non-Executive Director at the Institute of Risk Management. See here for IRM Infrastructure Risk SIG.
Cyber risk has established itself as a key feature of risk in the 21st Century. Efforts to prepare for, respond to and recover from cyber incidents are of profound importance and are at the heart of business survival and this should serve as a warning to businesses which perceive cyber risk as an issue to be solved by IT departments. It has long-been accepted (if not always implemented) that IT departments cannot manage cyber risk alone; however, building truly cyber resilient organisations requires engagement across the full breadth of our enterprises and at all levels of management. For its part, the IRM recognises the importance of addressing cyber risk and has long-been engaged in this area. Most recently, with the relaunch of its own Cyber Special Interest Group as well as the IRM’s Digital Risk Management Certificate.
Mark Clegg, SIRM, Director of Safety, Risk & Resilience, NG Bailey, and IRM Board member.
The energy sector has seen oil prices stabilise in the last couple of years following the crash and this trend is set to continue in 2020. Oil prices will either stabilise or increase slightly allowing companies to complete the recovery process and continue building on new projects and diversification. Nonetheless, the industry could face a very turbulent year in 2020 with the potential further deterioration of USA/Iran relations and the threat of major conflicts. This could lead to an increase in regional conflicts in a number of places. The potential increase in price may also spur the renewable sector, with increased investment activity (as a result of the increased oil prices) by the major oil companies, who may be looking to further diversify into the renewable sector.
Alex Larsen CFIRM, President/CEO of Baldwin Global Risk Services and Chair of the IRM Energy & Renewables Special Interest Group.
Political uncertainty will continue during 2020 as the details of BREXIT are worked out. Digital technologies, culture and regulation will also be predominant features. A key consideration for financial services firms in 2020 is how they can effectively demonstrate resilience given potential changes to business models, increasing complex digitisation, cyber security threats, and reliance on third parties including the continued move to concentrated cloud providers. Firms will continue to be slightly cautious given the continuing uncertainty but may take bigger risks around digital implementation to sustain their business models and reduce cost while balancing their resilience given the cyber security landscape in order to maintain customer outcomes.
Darius Mayhew SIRM, Head of Finance Risk, Assurance & Advisory at Direct Line Group speaking on behalf of the IRM Financial Services Special Interest Group
The health sector faces manifold risks and opportunities in 2020. As a headline, the sector is undergoing huge but essential transformation whilst managing enormous operational pressures, recovering from large financial deficits and addressing major performance difficulties. Continually rising demand for health care, arising largely from advances in medical science and an ageing population, requires the sector to change its direction of travel. The sector is adopting a range of measures to meet future needs, including new models of care; increased system working; establishing parity of esteem between mental and physical health; and moving care out of hospital, closer to the community.
Steve Treece, CFIRM, Head of Corporate Risk, Corporate Portfolio Office, NHS Digital. Click here for IRM’s Health and Care SIG.
The growing importance of climate change is a big opportunity for the nuclear industry. After a long period of public reluctance, nuclear could have a renaissance as the stable baseload element within a green energy mix. The window of opportunity is narrow, with only one new build currently in construction and older stations coming towards the end of their operational lifetimes. Technology, skills and supply chain issues are all key focuses, as well as change management. Times of change are hard for people, bringing threats and opportunities; supporting our workforces through change is an important element of maintaining an unrelenting focus on safety and security throughout.
Kathryn McCloghrie, CMIRM, Head of Corporate Strategy, Sellafield Ltd, Chair IRM Nuclear Industry Special Interest Group.
Complex supply chains can be dependent on a handful of components. This has been evidenced by several incidents such as the hard disk shortages caused by the Thailand floods, brake challenges for the whole automotive industry coming out of an explosion at a single German chemical plant and shortages of drugs as a result of a factory fire in China. The creation of more of these single points of failure in the context of increasing geopolitical interference in global supply chains mean we should also not be underestimating the financial impact this can have on supply chains. Organisations compete in terms of their supply chains including this sub tier exposure, and it is those that understand exposures to their critical supply chains who will be able to best protect their financial performance.
IRM has launched a new Supply Chain Risk Management Certificate.
Nick Wildgoose, Supplien Consulting Limited, content contributor to IRM’s new Supply Chain Risk Management Certificate.
The technology industry is finding itself under growing public and government pressure. A number of high profile scandals (think Facebook, Cambridge Analytica, etc.) have put the industry under the spotlight. With the elections in the USA coming up, we may very well see the first war on tech companies or social media companies from a government. This could be in the form of lawsuits, regulation, investigations and fines. The presidential election in the USA may also see the introduction of deepfakes being used for the first time in a major misinformation campaign. Deepfakes can take a video of any person and manipulate their actions and words to make it look like they are saying or doing things that never happened. We can expect to see an increase in regulation in 2020. The year will almost certainly see the collapse of a large number of cryptocurrencies, leaving only the legitimate projects alive and could well see the rise of the “stable coin” crypto currency.
Alex Larsen CFIRM, President/CEO of Baldwin Global Risk Services and Chair of the IRM Energy & Renewables SIG.
For more details on each sector and for regional risks, see the full report.