Industry leaders have been urged to teach global governments risk management techniques following the launch of the The World Economic Forum’s Global Risks 2013 report.
The report, released yesterday, showed a leap in global concern over the impact of inappropriate regulation.
It was a statistic which sat in the minutiae of the Global Risks 2013 report launched by the World Economic Forum (WEF) yesterday but a significant one none the less.
Unforeseen negative consequences of regulation jumped from 48th to 43rd place in the top 50 global risks identified in the organisation’s eighth annual risk report – formed following consultation with 1000 global experts from industry, government, academia and civil society.
Regulation risk showed the biggest change in terms in terms of the report’s impact scale of any listed risk when compared to the 2012 publication. Axel Lehmen, chief risk officer for Zurich Insurance Group who helped shape the report said: “This is a cry for stronger dialogue between the practitioners – the private sector – and the legislators in the public sector. We all know where inappropriate regulation leads.”
Other contributors to the report agreed that there is now a global spur for more intelligent collaboration between global governments and leaders in business and industry.
They also suggested that there is now an imperative, for large multinational organisations to share competencies and knowledge around techniques for risk management with global governments.
“Companies have realised that risks do not stop at the gates of your factory,” commented Mr Lehmen. “They have realised too that the risks one company faces are often not different from the risks that other companies and society are facing.
“Similarly with global risks we can see that they do not stop at national borders and that they require a globally coordinated approach.”
The Global Risks 2013 report lays heavy emphasis on the need to develop this approach and contributors said that established techniques for dealing with enterprise risk in the private sector should be adopted by global governments.
Lehman said government’s could benefit from appreciating how corporations and large companies have invested in developing ways to “look to a five to ten year horizon. Assess risk severity, frequency and establish processes for mitigating impact”.
The report text goes further to reiterate a recommendation made in 2007 that governments appoint national or country risk officers. Such a role would be comparable to the role of chief risk officers in the corporate world and would help to break down damaging silo perceptions of risks in government departments said WEF.
Appointing country risk officers would be the first step in enabling decision makers in the public and private sectors to benchmark and track a nation’s level of resilience to global risks. In particular WEF said that this understanding would clarify resilience in supply chains – a rising concern on executive and political agendas according to the organisation.
WEF representatives said that this more structured and coordinated approach would help manage a complex network of interconnected global risks. For 2013 global risks were seen to gravitate around three key themes: ‘testing economic and environmental resilience’, ‘digital wildfires in a hyperconnected world’ and the ‘dangers of hubris on human health’.
The Global Risks 2013 report will form a springboard for discussion at the World Economic forum in Davos later this month.
This event should be used as an opportunity to align national and industrial approaches to global risks said Adrian Monck MD and head of media and communications for the World Economic Forum.
“The forum brings together people and groups who don’t necessarily have discussions around global risk management in wider formats,” says Mr Monck.
“People and governments might meet individually and have interactions with companies on a one to one basis. But there are very few global opportunities to bring those people together at scale.”