MOSCOW: New horizons

The participants in our Russian Eurofocus addressed the complex questions of how far risk management has progressed. Clearly, risk management is not yet widely understood by Russian companies and confusion is compounded by insurers and brokers who appoint ‘risk managers’ simply in the hopes of selling their products, as well as the fact that risk classifications and management approaches differ between financial institutions and other companies. There is also a problem in convincing management and shareholders that effective risk management actually adds value.

However, the situation is now beginning to change with industrial companies taking a more active stance and businesses facing pressure from financiers to establish quality risk management facilities. Significant progress has been made nationally in terms of lowering the possibility of natural disasters or emergency situations, as well as reducing the damage caused by these situations. And the conclusion of our panel of risk professionals was that the gap is indeed closing between risk management in Russia and the techniques practised in western companies.

Sue Copeman, Editor, StrategicRISK

«Risk Management means to secure Business Opportunities». This sounds simple but if you take a closer look at what this means, it is actually quite complex.

Risks can be classified as operational, strategic and financial. Many of these risks are new to the Russian market, the complexity of which makes them difficult to manage. But, if you want to manage a risk you need to know the risk. It is clear from the discussion that some kind of Risk Management Certificate is needed in Russia, not only to have transparent, comparable and clearly defined Risk Management functions in place, but also to ensure that the Risk Manager can better manage risks in line with local and international standards.

Risk Managers are seeking to buy insurance on the broadest and best terms available through insurers with a strong financial rating. Risk management should be an integral part of a company’s culture and part of all major management decisions. At the same time they should look to ensure transparency and certainty over the risk exposures disclosed to the insurance market in order to avoid claims being denied due to non-disclosure.

ACE would like to see clear risk management programmes in place amongst Russian companies, which will help in building trust and attracting western insurers and reinsurers to the Russian market.