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A TechRisk/RiskTech Reading List from Risk Management Magazine

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Last week, the RIMS TechRisk/RiskTech virtual event featured two days of education content on some of the biggest challenges and opportunities in modern risk management, focusing extensively on cyberrisk as well as risktech—the latest technology tools and techniques for managing risk. As the presentations made clear, technology introduces some of the greatest risks to organizations, but also some of the most promising innovations to introduce or enhance risk management.

“We all know that, ‘As fast as a business develops a strategy to protect their organization’s digital assets, cyber predators have already figured out their next move,’” said Patrick Sterling, vice president of legendary people and risk management at Texas Roadhouse Restaurants and 2022 president of RIMS. “So, risk professionals must do what risk professionals do best: We must adapt. And we must adapt quickly.”

“We can’t forget about the risks that preceded this pandemic, and top on that list stands technology,” Sterling added in his address during the event. “Cyber gets a bad rap—when we talk about risk, we must remember risk can lead to positive outcomes. While greater dependency on technology has opened the door to more threats, it also allows us to improve processes, keep employees safe, boost efficiencies and engage our customers in a whole new way.”

As a RIMS virtual event, the content from TechRisk/RiskTech will be available for attendees or new registrants to view on-demand for the next 60 days, and you can check out the sessions here.

Following the TechRisk/RiskTech event and last Friday’s international Data Privacy Day, risk professionals who want to learn more about cyberrisk and risktech topics can also check out a wealth of related articles from Risk Management Magazine. Whether you would like to keep up the education after attending TechRisk/Risktech or just want to catch up on topics like cyberrisk, ransomware, cyber insurance, risktech, artificial intelligence, the internet of things and connected devices, and other technology that can help manage risk, here’s a roundup of recent Risk Management articles on cyberrisk and risktech:

Tech Risk (Cyberrisk):

Risktech:

Tornadoes Devastate Midwest and Southern States

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Last week, a series of tornadoes ripped across the Midwest and Southern United States, killing dozens and crippling infrastructure in Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, Ohio and Tennessee. While Karen Clark & Company has estimated that the insured loss from the tornado outbreak will be about $3 billion, and credit rating agency Fitch predicted that losses would total $5 billion, Dr. Joel N. Myers, AccuWeather founder and CEO, estimated that the tornadoes are expected to cost about $18 billion in total damage and economic loss. Mark Friedlander, director of corporate communications at The Insurance Information Institute, said, “Based on preliminary assessments of the extensive property damage we are seeing across multiple states, this weekend’s tornado outbreak has the potential to be the costliest on record in the U.S.”

As of Monday, 88 deaths across the region had been confirmed, but over 100 people are also missing, which means the death count may be higher. The cyclones killed more than 70 people in Kentucky, the hardest-hit state, leaving thousands homeless and knocking out power for more than 25,000 in the western region of the state. Additionally, 10,000 Kentucky homes and businesses reported being without water, and another 17,000 were under boil-water advisories, according to the Kentucky Division of Emergency Management.

Across the entire affected region, 750,000 customers were left without electricity. These outages have complicated search and rescue efforts, as rescue workers excavated destroyed buildings, searching for people who are still missing. In Mayfield, Kentucky, for example, the city’s main fire station and multiple police stations were inoperable, and the city was scrambling to find new ways to field emergency calls.

Also in Mayfield, at least eight people died at a Mayfield Consumer Products scented candle factory after workers reportedly pleaded with supervisors to let them leave the building after warning sirens sounded and an initial twister had passed with little damage, only to be threatened with firing if they did not continue working. Over 100 workers were trapped inside the building after the next tornado leveled it. Several survivors have already filed a lawsuit against the company, citing “flagrant indifference” to worker safety, and that the company “knew or should have known about the expected tornado and the danger of serious bodily injuries and death to its employees if its employees were required to remain at its place of business during the pendency of the expected tornado.”

Another tornado struck an Amazon warehouse in Edwardsville, Illinois, killing six people and injuring another. Amazon claims that it took all necessary precautions, but family members of victims have alleged that the company prioritized productivity over worker safety by not heeding tornado warnings and not adequately preparing employees for emergency weather safety responses. Amazon pledged to help workers and their families affected by the tragedy by donating $1 million to the Edwardsville Community Foundation, a charitable trust that benefits regional communities. OSHA is reportedly investigating the Amazon warehouse, and Kentucky state regulators are investigating the Mayfield Consumer Products event.

While an Amazon spokesperson noted that the company’s warehouse was up to code, Illinois governor J.B. Pritzker also promised an investigation into whether building codes needed to be updated, “given serious change in climate that we are seeing across the country.” Scientists say that climate change may have changed normal weather patterns and led to these tornadoes’ increased intensity and reach, with record warm temperatures across the region potentially exacerbating the disaster.

Businesses and risk professionals should prepare now for more frequent and intense weather events. The following recent Risk Management articles may help:

RIMS Risk Forum India 2021: Building Resilience As COVID, Cyberrisk Top Business Risks

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An increasingly key theme year over year, resilience is at the root of the latest Excellence in Risk Management India report from Marsh and RIMS—and the RIMS Risk Forum India 2021 virtual event, where the report was officially released today. In the second year of the COVID-19 pandemic, risk professionals in India reported acute short- and long-term concerns about the interconnected risks of COVID-19 cases, global economic recession, and surging cyberrisks amid shifts in work arrangements.

In addition to the death of more than 5 million people in India, the pandemic has taken a considerable economic toll on the region. “According to the Organization for Economic Co-operation and Development (OECD), India’s economy contracted by close to 8% in 2020, while the world’s economy contracted by 3.5%,” the report noted. “Despite the OECD’s projections for economic expansion—both in India and globally—in 2021 and 2022, the potential for a prolonged global recession remains a concern for organizations in India.

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”

Previously one of the top risks for India-based risk professionals before COVID-19, cyberrisk has also increased significantly with the pandemic and the shift to remote work. “The shift to a remote workforce necessitated by sweeping lockdowns to stem the spread of the pandemic is widely seen as having increased cyberrisk,” Marsh and RIMS noted. “The Indian Computer Emergency Response Team (CERT-In) data indicated that cyberattacks in India rose by 300% in 2020, according to news reports. And cyber risk remained elevated in 2021, with more than 600,000 cybersecurity incidents reported in the first six months of the year alone, according to CERT.”

The continuing pandemic, resulting fallout, and ever-growing cyberrisk have presented the biggest risks for organizations in India in 2021, and the survey indicates that local risk professionals expect these to dominate the agenda for businesses in the year to come.

Despite the considerable concern, few respondents said their company is fully prepared for the continued fallout from COVID-19 or future pandemics. Asked to rate their organization’s preparedness from 1 to 5 (not prepared to fully prepared, respectively), the majority of India-based risk professionals ranked their organization a 3, and only 10% said they are fully prepared. While cyberrisk has been a top threat for longer, preparation is not much better for the threat—only a quarter of Indian companies said they are fully prepared for a cyberattack. This is particularly concerning as “some extent of remote work is expected to remain, leading to concerns of increased cyberattacks due to unsecured home networks,” Marsh said in a press release.

According to the report, this underscores the imperative to develop robust risk management strategies for both current and emerging risks and to focus on building resilience. Marsh identified four “common behaviors among companies that are on the path to becoming more resilient”: anticipating risk, connecting risk management to business strategy, avoiding gaps in the perception of preparedness, and measuring relevant data. Marsh and RIMS explained these further, defining key pillars that have set successful businesses apart, and potentially also offering considerations for other organizations to develop more mature risk management programs:

  • Anticipation: Resilient companies expect the unexpected. They have crisis management plans in place, but they also dig deeper, look farther ahead. Consider that during the pandemic even organizations with thorough business continuity plans struggled. Why? Many of them didn’t fully anticipate the widespread, long-lasting damage a pandemic could create.
  • Integration: Another key behavior among resilient organizations is to fully integrate risk management with operations and strategy. Doing so increases the ability to develop effective responses. Most organizations do not connect resilience planning with their long-term investment strategy. Those that do make the connection are on the path to better mitigating financial exposure, reputational damage, business interruption, and other losses.
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  • Preparedness: On the journey to resilience, it’s important to develop an accurate perception of an organization’s preparedness. A false sense of security can halt an organization in its tracks. Companies often overestimate how quickly and effectively they will be able to respond to and recover from a given risk.
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  • Measurement: There is no shortage of data and analytics in today’s business environment. But consistently applying metrics can be a stumbling block. Many companies fail to conduct a high rate of modeling and forecasting even on risks they see as important. And among the companies that do so, most only model in select areas.

Marsh and RIMS recommended that organizations in India focus on resilience heading into 2022 and beyond. “Resilience means being able to absorb the impact from a range of emerging risks and depends in large part on having robust risk management strategies in place,” the report explained. “This includes anticipating risk, connecting risk management to business strategy, ensuring your organization’s perception of preparedness doesn’t lead to a false sense of security, and measuring relevant data.”

Respondents largely indicated that their organization planned to increase investment in risk management, with 55% saying they expect increased resources, 27% expecting investment to stay the same, and only 4% expecting a decrease. This could be a critical differentiator in navigating COVID-19 recovery and other emerging risks in 2022. Indeed, 42% cited budget at the most critical barrier to understanding the impact of emerging risks on risk management.

Among the takeaways from the report, Marsh and RIMS urged organizations to invest in preparedness. “Look beyond pandemic as you develop a risk management strategy that is prepared to respond to any number of emerging risks,” the report said. “For example, shifting work patterns have intensified an already escalating cyber risk landscape that calls for a range of responses, from scenario planning to financial quantification.”

In addition to a panel on the Excellence in Risk Management India report, the RIMS Risk Forum India 2021 virtual event includes a number of sessions that address resilience challenges and opportunities for risk professionals in India. The program includes keynote addresses by Ajay Srinivasan, chief executive officer at Aditya Birla Capital Limited (ABCL), and Dr. Soumya Kanti Ghosh, group chief economic advisor at the State Bank of India, as well as education sessions like “Cyber Risk Management: A Priority for a Resilient Economy,” “Climate Risk and Your Path to Resilience,” “What COVID-19 Has Taught Us About ESG Risks and Why Risk Management Needs to Change,” and “Breaking the Chain: How Understanding Business Interruption Exposures Can Mean Supply Chain Resilience.”

The RIMS Risk Forum India 2021 virtual event continues tomorrow, December 4, and sessions will also be available for on-demand viewing for the next 60 days. Registration can be found here: https://www.rims.org/events/rf/india-forum-2021

RIMS ERM Conference 2021: Lloyd’s Chairman on the Vital Role of Risk Management in Fighting Climate Change

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With climate change quickly becoming one of the most important issues facing the world, Lloyd’s Chairman Bruce Carnegie-Brown stressed the importance of ESG initiatives to address the threat, as well as the vital role of risk managers, in today’s keynote address at the RIMS ERM Conference 2021 in New York City.

As evidenced by the increasing number of weather and climate-related natural disasters in recent years, the stakes couldn’t be higher for organizations and communities around the world, according to Carnegie-Brown. “Disruption, poorly managed, could destabilize our economy,” he said.

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“Delay could destroy our ecosystem.”

Failing to take action on the climate change threat is not a sustainable strategy and will only exacerbate the damage in the future, Carnegie-Brown warned. In the face of these threats, risk managers have an important role to play in helping their organizations embrace ESG and become more resilient. “A business’s risk operations are an essential component of building ESG into the organization—often they are the driving force.

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” he said. “Executives rely on their insight to power their decisions and navigate the pitfalls of new challenges. Like insurance, it enables braver decisions and more courageous action. Communicated effectively, that insight can establish a permanent place at the table for risk management.”

To be most effective, Carnegie-Brown suggested that risk managers play close attention to how they are perceived and how they interact with the rest of the organization. “If risk managers are perceived as being reactive, we need to make sure we are on the front-foot in understanding and assessing these emerging issues,” he said. “If we’re perceived as operating in the shadows, we need to be transparent in our methodology and in our motives. And if we’re perceived as obstructive, we should consider a flexible approach that allows our organizations to act innovatively and with an awareness of the potential risk.”

While it represents a daunting challenge, Carnegie-Brown saw an opportunity for risk managers to demonstrate their value by taking on the difficult task of developing organization-wide plans to address climate change. “Those plans must account for the multifaceted nature of environmental risk, they must employ the best of our skills and technologies to communicate the risk to our stakeholders, and they must be built to facilitate and orderly and urgent transition,” he said.

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“Achieving this will allow us to carve out a pioneering role for risk management in the fight against climate change, while helping our organizations to become more inviting to investors, more attractive to prospective employees, and more likely to last sustainably in the decades to come.”