Risk management down under

Governance, compliance and risk were top of the agenda at an annual conference for Australian risk managers, which took place in the Gold Coast between November 25 and 27.

In a statement that should ring true for all those concerned by the new Corporate Manslaughter legislation in the UK, Marianne Robinson of DLA Phillips Fox said: ‘The board of directors can delegate the execution of their decision, but not their legal responsibility.’

Speaking at the Risk management Institution of Australasia’s (RMIA) annual conference, she also insisted on the director’s prime responsibility to the organisation itself not the shareholders.

Verbalising a fear that is shared elsewhere in the business community, Phillips stressed that too many directors are diverted from key innovations and strategic policy through fear of legal repercussions: ‘Many directors are so concerned with how the business deals with legal risk and their own personal liability that they have become risk adverse.’

‘The challenge facing both private and public sector organisations is how to manage legal risk and how to implement effective compliance and governance programs without creating a risk adverse environment where the core business comes to a stand still,’ she said.

“Many directors are so concerned with how the business deals with legal risk and their own personal liability that they have become risk adverse.

Marianne Robinson of DLA Phillips Fox

Ernst and Young’s Gail Bergmann wondered whether governance was a manageable risk, in doing so she touched on a very hot topic, the move towards private equity in some large corporations, which some analysts have linked to the increasing burden of compliance and governance issues in publicly traded entities.

Elsewhere at the conference, the usual suspects were also present; also called the emerging risks such as climate change, pandemics (avian flu), and identity theft.

Climate change was addressed in a plenary session where the speakers were Gary S. Guzy, head of the emerging environmental risk practice at Marsh and Dr. Owen Cameron.

The speakers claimed that climate change is now a mainstream business issue, and will remain so for the foreseeable future. It will impact most core business operations in particular as organisations are increasingly focused on their carbon footprint, they said.

To address the enterprise risk management and operational challenges posed by climate change issues, the speakers recommended that organisations transcend silo based approaches, and embrace concepts such as regulatory toolkits and lobbying, supply chain carbon risk management, and carbon based accounting.

“Risk management helps concentrate on the essential and enhances the link with the community through the consultation process it includes.

Jude Munro, chief executive of Brisbane City Council

They also warned that the emergence of climate risk coincides with increased disclosure requirements; therefore a failure to address them might represent a breach of governance and expose directors and companies to increased risk from climate litigation.

On a topic frequently tackled, John Badgery, SafeWork SA, Department of the Premier and Cabinet, proposed: “A practical guide for the development of continuity plans for human disease pandemic.” He said the guide identifies key preparedness, prevention, response and recovery activities that need to be undertaken. Badgery stressed that to remain relevant, pandemic influenza plans need be flexible and scalable.

One of the main contributors on identity theft was Paul Curwell, Booz Allen Hamilton, during his workshop he stressed that limiting loss control efforts to ‘theft’ could open avenues to prospective criminals.

Steve Nevett, chief executive of AON Australia gave another indication of the evolution of risk management practices when he insisted upon the need to be responsive and capable of online advice.

Jude Munro, chief executive of Brisbane City Council delivered a presentation of the challenges that the city will have to face to maintain its rank as on of the world’s best cities to live, while it also expects to absorb a projected 1m people. She concluded: “Risk management helps concentrate on the essential and enhances the link with the community through the consultation process it includes.”