Not to say new ideas about managing risk don't exist. The annual Risk InnovatorTM awards in this publication are evidence to the contrary. Yet the insurance industry for one is still afflicted with a reputation for much of the same old thing.
I think part of the problem has been some who drew comparisons to the banking industry and its continuous change mode. I say "problem" as this change has not always been for the better. In fact, if you just look at the length of time the Basel Accord has been in formation and the number of iterations it has been through in over a decade of development, you can come to only one conclusion. Change is not always good and is often an excuse for ineffective decisions. But change can be good and often is.
The change I'm experiencing as I transition to the next phase of my work life is actually refreshing and motivating. Or it may be the opportunity to truly do some very different things with greater freedom and more emotional investment; things that are much more personally gratifying.
Change has been at the center of my life from the jump. We moved every two or three years when I was growing up and I was faced with finding new friends and acquaintances at each move. I've always said this background gave me incredible resilience in the midst of all kinds of change. In fact, I got restless whenever I stayed in one place (home, job etc) too long.
To be innovative you have to be willing to accept change, even aggressively pursue it. Is that risk free? Certainly not. In fact it's fraught with personal risk, the kind that can kill a job or even a career. But to avoid change and thus ignore innovation opportunities is to, in reality; only increase your personal risk even more.
I recall establishing my 2002-03 Risk and Insurance Management Society Inc. (RIMS) presidency platform as broadening RIMS members' roles from traditional to a broader, more comprehensive approach to managing risk. Most RIMS members were comfortably engaged in traditional, hazard-based risk management and of course, in most cases, doing it well.
But that same zone of comfort became a barrier to accepting my platform premise,; that to stay in that comfort zone, while businesses were in desperate need of a new and better approach to managing risk, was to risk your position as "risk manager."
After all, what should an executive team or board expect from a "risk manger" but that all material risks to a company are addressed. Well, not for many practitioners at that time. That old comfort zone was a bit too cushy.
The result: The auditors, lawyers, planners, compliance and other functionaries quickly took the lead. The next result: Many traditional risk managers at risk for relevancy and impact. Many have since been displaced or rendered insignificant players occupying another overhead position subject to expense control scrutiny.
So don't get too fond of your comfort zone. If you're not innovating, you're value to your employer is at a minimum, less than what it could be and at the extreme, a possible drag on performance that could eventually lead to involuntary change. Don't let that kind of change catch up with you. Change really can be a good thing.
CHRIS MANDEL is principal of Excellence in Risk Management LLC, and is a long-term senior risk manager and former president of RIMS.
November 1, 2010
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