GENEVA: The future for risk management in Switzerland

On the last day of September, Swiss-based risk managers gathered at the Intercontinental Hotel in Geneva on the eve of the FERMA conference for StrategicRisk’s latest roundtable. Together with representatives from ACE, they sat down to discuss three topical areas affecting risk management in Switzerland. The first was to assess the likely impact of new regulations proposed by the Swiss government in the field of risk reporting and external auditing. The second was to take an overview of the maturity of enterprise risk management within Switzerland, and the final topic was ‘what is on the horizon’ in terms of emerging risks.

Participants felt that the new regulations requiring the supervisory board to report on risk management posed no real difficulty for large companies who already have processes in place, and they basically only have to adapt their reporting methodology accordingly. The consensus was this should not result in a pure compliance exercise aimed at ticking boxes, but be integrated in the reporting process, creating value for the business. The question came up as to how small and medium sized companies would cope with the new requirements, since the low threshold will affect many SMEs in Switzerland. Since most of the participants belong to multi-national companies who were well used to formalised risk management processes, there was some discussion about how smaller enterprises might be best helped, and whether there was an opportunity for SIRM (the Swiss risk managers’ association) to reach out to them.

When it came to the overview of risk management, the focus of the discussion was again on what smaller companies did. Participants felt that owners of small companies, who were effectively risk-managing their own investment, might be able to teach a thing or two to larger companies. After all, most of the high-profile failures of recent years had taken place in large companies. Some SMEs are good at risk decisions but risk formalisation and a structured approach is usually missing.

The final topic of emerging risks provoked considerable debate about how such risks might be defined, whether they were, by nature inter-linked, and whether in fact the single biggest risk fact was increasing complexity and speed. In essence, participants felt that potential risks on the radar screen of insurers, such as nanotechnology, are not seen as the biggest threats, but IT dependency, shortage of water, climate change, political risks, energy supply and an ever-increasing complexity of global business are on the horizon. There was some questioning of whether it was possible to manage such risks at all, and about what role insurance could play.