Departing from some of the more frivolous things I usually talk about, I want to direct your attention to a new report issued by the World Economic Forum (WEF). This document titled “Rethinking Risk Management in Financial Services” is a fascinating study undertaken to explore how risk management techniques used by other industries might have an application in financial services.
As noted in the preface, the financial crises highlighted the need to improve risk management strategies in the financial services industry. “New thinking is required to rebuild a damaged financial system.” Accordingly, this report is an effort to improve risk management “from the outside in” – trying to learn from practices and patterns used by industries not normally considered when thinking in terms of financial services.
And what a strange collection they have used – aviation, fisheries, wildfire fighting, immunology/epidemiology, telecommunications, and pharmaceuticals. I think that, as you read through the document, you will not only be surprised by the variety of industries considered, but also the similarities that exist (and might have been overlooked.)
(In the spirit of full disclosure; Farmers Insurance, for whom I work, is owned by Zurich Financial Services. ZFS was an important player in this project, including providing Zurich’s Chief Risk Officer as one of the co-chairs. However, it is the content of this document that has led me to suggest you review the document, not my employment status.)
And the key to this whole thing is in a statement found towards the end of the preface: “We trust that the report will stimulate your thinking, introduce new ideas, and add to the broader discussion aimed at improving the long-term stability of the global financial system.” I will change that to say “…improving all risk management approaches.” Just because you don’t work in financial services doesn’t mean there isn’t something to be learned here. One major takeaway is that we can learn from any source no matter how disconnected from what we think we do. Think about it – learning about financial services risks from practices in salmon fishing!? And, if nothing else, this serves as a reminder to always remove our blinders before we look at anything.
See anything that applies to what you’ve got going on?