FERMA Highlights Strategic Risk Priorities, Creates New Committee

Climate change, cyber threats, supply-chain disruption, and people risks should be top priorities for organizations looking to manage their strategic risks, according to the Federation of European Risk Management Associations (FERMA).

FERMA outlines the priorities in a new white paper, The Roadmap to Strategic Risk Management, produced in partnership with Marsh.

FERMA indicated it believes organizations must prioritize the following developments.

• Expansion from climate-related risks to a wider nature-related perspective both in the EU Corporate Sustainability Reporting Directive regulations and in the recent "Taskforce for Nature-Related Financial Disclosures" guidelines
• New facets of cyber-related risks arising from new technologies, notably artificial intelligence
• Supply chain-related risks, their interconnectedness with other risks, and their relevance to the organization's strategic objectives
• Legal consequences and strategic business decisions following geopolitical crises
• People risk, in its various forms, such as attracting new generations, and social risk, such as polarization

The FERMA white paper also details several aspects of risk analysis and company resilience that must be enhanced.

• The balance between short-term and long-term views on risks and opportunities
• Quantitative risk-analysis approaches and scenario analysis to support decision-making
• The use of data and deployment of new technologies, even if in pilot form, to leverage benefits that enhance the proactive role of risk management in identifying early warning signs
• Enhanced risk culture, strengthening the risk awareness of the first line and general collaboration of key stakeholders on key strategic and emerging risk topics
• Alignment of risk communication to the top management and the board based on business expectations and linked to strategic objectives

To support its members in these strategic risk management efforts, FERMA has created a strategic enterprise risk management (ERM) committee. To be launched in early 2024, the committee will provide risk managers with knowledge, tools, and resources to support their enterprise risk management efforts.

Chaired by Laurence Eeckman, FERMA board member and vice president of group risk management at Atlas Copco AB, the committee will focus on governance, culture, and communication. Members will share knowledge on processes, methods, and tools to support the development of effective risk strategies and integrated approaches to amplify risk management practices.