Reason Magazin 2014Q3 Seite 27

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insurance coverage at the moment How do we convince the market that it needs to be included ANDY It boils down to how much individual insurance companies perceive the severity of their clients exposures and the effect on pricing both in terms of their capacity and the reinsurance they choose to place PAUL In terms of pricing risk though you have to draw the line somewhere in the likelihood of an event happening For the Canary Islands slip you build that as a low frequency event Or if an organization has three suppliers for every component then we will never have supply chain interrup tion It s a case of how much you want to spend on risk management PAUL There is typically a gut feeling of reasonableness and comfort in a board s position of what they are prepared to lose beyond insurance and including reputation and share value PETER We often get asked to identify emerging risks and we spend time think ing about things that haven t happened yet Instead we should focus on how risks are changing For instance technology is chang ing the concentration of risk in a multitude of industries If we focus on understanding how risk is changing across organizations on a consistent basis versus trying to spend time determining possible emerging risks we would get a better return on our risk man agement efforts ROB I agree If I consider risks in Crossrail there are lots of far fetched ideas of what the risks might be but the ones that have actu ally had an impact on us are the ones that we thought we had nailed down For all the discussion about black swans I am keen that we don t miss the white swans And even for the risks we think we understand we must realize that we understand them less and less as they become more complex In the world of shareholders stakehold ers and insurers who has a role in man aging supply chain risk ANDY There is definitely a role for insurers to play as stakeholders in supply chain risk and not only in terms of providing insur ance capacity Where an insurer has a par ticular expertise that a company lacks the insurer should be actively partnering with that company its client to leverage that expertise for the benefit of both the com pany and insurer PETER As an insurer I am seeing a grow ing trend from private equity companies showing an interest in the resilience of their investments supply chains They are show ing a more systematic interest in how com panies are managing their downside risks CEDRIC Cash flow volatility and dividend returns are two key parameters used by investors to assess the quality of equity investments We need to better demonstrate that solid risk management practices support and enhance shareholder value PAUL When investors make an investment 10 percent of their decisions are based on the strength of the governance of that com pany That has probably doubled in the past 20 years ANDY Nonexecutives and the board in gen eral are far more proactive and aware of risk management performance and see it as something to be challenged in terms of its effectiveness Do solid risk management practices enhance an organization s reputation and impact shareholder value CEDRIC Some of our clients are actually putting resilience at the center of their com mercial offering For instance an organi zation that manufactures microchips for credit card and mobile phone providers has a commercial agreement with its clients that is dependent on the level of business continuity that it wants to be able to guaran tee in the event of a disruption In this case business continuity is sold as a competitive advantage PETER There are cases where the share price has been raised as a result of the market wit nessing how an organization has responded to a disruption putting to the test its business continuity plan and management There can be a positive outcome to this I am confident that a big component of reputation is reli ability so the more that these risk manage ment practices are recognized by the mar kets to be sound and robust the more of a factor risk management becomes in improv ing share price performance ANDY Good risk management practices enhance shareholder value You don t have to think in terms of disasters happening or their adverse effects being avoided Effec tive supply chain risk management should be embedded in a well run business and I think overall this will positively affect the share price ROB At Crossrail it is definitely part of our approach to help our suppliers develop their risk management capabilities In doing so we are looking after our own organization and helping our supply chains to deliver effi ciently and improve their profitability ISSUE 3 2014 Reason 27