March 2024

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Executive summary

Complex risk and shifting operating priorities have dialed up the need for a strategic approach to risk management.

An optimised risk team is arguably better positioned to demonstrate its value and alignment to functional leaders and executive/board objectives, while shifting the perception of the risk function from cost center to growth enabler. In some cases this shift can be a game changer, triggering broader operating efficiencies and productivity benefits.

Getting closer to the risks inside and outside the business enable businesses of all shapes, industries and sizes to navigate a more complex trading environment — so does being clearer on priorities and coordinating with risk mitigation.

Although there is no one-size-fits-all solution that provides an optimal risk management function design, a cross-team and collaborative approach to assess risks from multiple angles can be beneficial.

Insights

  • The pandemic tested how people view risk, providing a valuable test of resilience and preparedness. It was a pivotal moment across all industries and sectors.
  • While businesses may be risk aware and embrace the need to prioritise risks, the approach may not be where it needs to be, often due to resourcing issues.
  • Best-practice risk management comes from having a wide and connected view, removing siloes and working across the business. This approach provides a holistic view of a specific risk, including its gravity and priority.
  • Risk and opportunity are essentially two sides of the same coin. Designing a risk management function takes into account structure, enablement and focus.
  • Having the right brains and technical skills around the table is central to optimal risk function design.
  • Operating models should ideally offer built-in flexibility to evolve capability in line with prevailing risk exposure and the ability to right-size the risk function to align with business objectives.
Disclaimer

CONDITIONS AND LIMITATIONS Gallagher's global operations, including a network of correspondent brokers and consultants, offers client-service capabilities in more than 130 countries around the world. This report and supporting information is not intended to provide legal or financial advice and reflects our understanding as at March 2024. It should not be regarded as a comprehensive statement of the law and/or market practice in the regions covered. You should not act upon information in this publication nor determine not to act, without first seeking specific legal and/or specialist insurance and risk management expertise. Should you require advice about your specific insurance arrangements or claim circumstances, please contact your Gallagher account representative.