Risk professionals need to learn resilience

Posted on Tuesday, July 7, 2020

Resilience is an emerging business trend in 2020. And it carries a double meaning: all professionals will need a certain level of personal resilience to cope with the highly unpredictable economic world featuring social distancing and remote working. There is also a need for risk professionals to understand the concept of business resilience.

For the past 30 years or so, most businesses have prioritized leanness and efficiency. In the case of supply chains, ‘just-in-time’ delivery replaced the practice of holding inventory in warehouses. The Covid-19 pandemic, among other factors, has exposed the weaknesses in such an approach. When there is an unexpected interruption to supply, the results can be empty supermarket shelves and essential workers without protective equipment.

In a world where the timing and scale of economic shocks are impossible to anticipate, and where digital and other technological changes are rapid, an ultra-lean business model becomes fragile. Instead, organizations need to be able to absorb shocks, adapt and learn, as this Boston Consulting Group article discusses. Resilience is replacing efficiency. Some businesses were already starting to make this adjustment before Covid-19. The pandemic has accelerated this – moreover, it is changing the way businesses operate, as remote working is going to be with us for at least the medium term, perhaps longer.

Ed James, director of RCQ Associates, a recruitment agency specializing in the financial sector, says that operational resilience is almost always covered by risk, as well as business continuity, but that companies rarely identify it as a specialism in its own right. ‘You don’t have a Chief Resilience Officer or a resilience department. Often operational risk people will have that as part of their role, rather than a specialist resilience role.’

In the short term, however, the skills in demand on the jobs market appear to have changed remarkably little during 2020. Ed James reports that activity started to pick up in June, after a very quiet April and May, although activity is still around half what it was a year before. The skills in demand have followed the cyclical pattern reflecting regulatory requirements, rather than being Covid-specific:

‘ICAAP [Internal Capital Adequacy Assessment Process] hiring has been on a higher level than anything else. It is regulatory-driven, so there has been a lot more hiring in that area than others. Regulatory deadlines aren’t changing despite Covid, though regulators are maybe able to be a little more flexible. Deadlines do vary from bank to bank depending on when their financial reporting years are.’

Simon Caplan, COO of a specialist insurance sector recruiter, covering risk professionals at Arthur Financial, adds: ‘The risk role with coronavirus hasn’t really changed: Although there are now risk reviews and analysis of the impact and opportunities of Covid, skills in demand haven’t really changed. For insurance companies … there have been slightly more quantitative roles currently but that’s cyclical and regulatory driven: reviewing models … but we haven’t had one conversation yet,  where they have said that because of coronavirus we need a different risk skillset.

‘There are conversations about coronavirus, but they are about how it may affect growth, or strategy – not specific skill set for risk roles. But what we may see is a change in adaptation, and in the attributes in people if we continue to work from home. Some companies are going really far: creating programmes for their managers. There are likely to be questions at interview on: How do you work remotely? How do you develop your staff when working remotely?’

There are extra challenges of confidentiality when people work from home – they may be sharing a house with someone working for a competitor; or there might be house mates working respectively for a regulator and regulated company.

Remote working appears to be with us for at least the medium term. ‘Everyone is just getting used to the new normal,’ says Ed James. ‘Most banks have suggested that we’re unlikely to be going back to the office in 2020.’

Simon Caplan adds: ‘Having to upskill – managers having to train and develop people, push people forward, is a different skillset when you have to do it remotely. A junior staff member might [in the past] have just gone to the desk [to ask for advice]. That’s changed.

‘And the recruiting process seems to be taking longer; with the impact on growth plans and inability to meet face to face to gauge cultural fit, people are taking longer to make a decision on hiring, and rightly so.’

In response to the events of 2020, it seems clear that risk managers need to deepen their understanding of the concept of business resilience; but perhaps the biggest challenge to emerge is the personal one of learning to hire, appraise, develop and motivate people when your main contact with them is via a screen.


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