Trend towards holistic risk management approach

The current trend in the insurance sector is ‘enterprise-wide risk management’. In essence it’s about holistic management of risk and it’s an area of strong focus at risk management and insurance consulting organisation, Aon South Africa. The company recorded an excellent 2008, according to David Vines who heads up the risk management division. “Business development was exceptional – and we grew the team and the division in terms of business and consultants.” The company has continued to achieve its expansion objectives in sub-Saharan Africa on the back of client demands, he told FTW. “But our major focus has been on developing enterprise-wide risk management systems. “As opposed to looking at the general operational issues within companies and clients we’re moving into the business side, covering areas like markets, branding, reputation and all other aspects that impact on a business and its stakeholders. As well as looking at the physical and legislation aspects that can affect a company’s operations, we’re looking at the overall general business risks.” For the shipping industry, this holistic approach is allencompassing, including supply chain management and logistics. Of paramount importance in the current business environment is the change in corporate governance, says Vines. “The King 2 commission report has made risk management a company’s own responsibility. King 3 will put even more emphasis on risk management issues.” And when it comes to risk management, prevention is always one of the initial steps – but if something does happen you need business continuity and contingency plans to ensure that business gets up and running as quickly as possible with the least possible disruption, he added. The year ahead will be a tough one, in his view. In a recessionary environment, companies will be trying to cut spending money on grudge services like insurance premiums in a hardening market when in fact it’s a time when they should be paying even more attention to risk management issues. Globally the insurance industry is increasingly expecting companies to implement their own risk management programmes – and compliant companies are enjoying the benefits in a reduction in premiums. Essentially there needs to be a partnership between customer and the consultancy – with customers reaping the rewards of their prudent risk management interventions.