The international risk environment is dominated by record high inflation, upward pressure on interest rates, a simultaneous food and energy crisis, new Covid lockdowns in parts of Asia, likely recession in many markets, and increasing risk of decreased discretionary spending. The last couple of weeks in the US have been punishing with trillions of dollars of stock value lost, and the worst six months of trading since 1970. Historically, when recessions occur, corporate earnings decline by about 15 percent on average.
With these risks, we need to be identifying risk mitigation activities, and what better that growth. And for the naysayers: yes, sustained and profitable growth is possible during recession. If you don’t believe me, consider a few tiny companies that were founded and flourished during a downturn including Microsoft, Burger King, Airbnb, and the Hyatt Hotels chain. Nevertheless, if you are not interested in growing your company or you think growth is the role of someone else, you must surely accept and understanding that mitigating risk is everyone’s responsibility.
When effective, sustainable, and inclusive risk management initiatives are championed across all business areas, risks are reduced and opportunities become more obvious and more attainable. Ask yourself: Do you want to work in an organisation that embraces opportunity with the confidence of robust, adaptable, and inclusive risk management practices? Of course you do, and so does all the best talent. Pursuing exciting opportunities brings risks to an organisation, but opportunities also bring oxygen and excitement, enrich the company’s culture, and bring purpose to the workforce. Don’t miss the opportunity that whilst we are operating in a challenging environment, we can still bring greater shareholder value, attract and retain the best talent, and pursue exciting opportunities.
By defining your risk appetite, having relevant and measurable key risk indicators, and creating an innovative company culture that embraces opportunities – within the framework of responsible risk – your company will thrive whilst many other companies are declining. Your commitment to building a risk resilient organisation that is innovative, growing, and adaptive in a volatile business environment will ensure your teams can turn disruptions into success. Now you have to set the tone, identify the right risk management talent, and resource the risk programs.