Woody Allen’s adage that 80% of success is showing up is particularly difficult for some managers to take to heart regarding risk management.
When risk management is successful, there is no bell that rings. There are no fireworks. Usually, a successful risk management moment is evidenced by a lack of big surprises.
But most days, big surprises do not happen anyway.
So if risk managers want to be appreciated for their work, they have to do much more than just show up. They need to build up the story around what a very good day looks like.
- One such story would be that a very good day might happen when the world experiences a major catastrophe. A catastrophe that is in the wheel house of the firm. And because of a good risk management process, the firm finds that its losses are manageable within its capacity to handle losses.
- In 2011, there were major earthquakes in New Zealand, Japan and Chile. One reinsurer reported that they had exposures in all three zones but that they were still able to show a (very small) profit for the year. They credited that result to a risk management process that had them limiting their exposure to any one zone. A risk manager could work up a story of events like that happening (multi event stress scenarios) and preview the benefits of ERM.
With such stories in mind, when that big day comes when “Nothing Happens”, the risk managers can be ready to take credit!
But to do that, they need to be sure to show up.