Risk Management on demand services – the latest trend
Some are on the up. Others struggling. Neither can afford to ignore the latest trend in risk management…
Some businesses have cut risk management resources as they struggle. Others are seizing opportunities for growth with alacrity.
Whether you are shrinking or expanding, the area of concern is… Resources.
A growing business ramps up activities to meet new demand. However, the belief within an organisation that to facilitate expansion it can simply do what it already does, but on a bigger scale is fundamentally flawed.
Such an approach will inevitably open the business up to new risks and potentially large losses, legal action and reputational damage. Worst of all the new customers that have been won and who have fuelled demand and expansion can very quickly get turned off to the brand and decide to spend their money elsewhere.
And then there are businesses that, facing difficulties, have decided to reduce their risk management resources. They see this reduction as a way to save money, although this method of cutting “overhead” probably means that they underestimated the increased costs of losses incurred as a result of these “money saving” measures.
So, whether your challenge is to manage risk in a rapidly expanding business, or to retain as much risk management function as possible in a shrinking business, the fundamental problem is the same. How do you resource and manage change occurring at a rapid rate? And when we talk about “resources” the most difficult to acquire is proving to be “human resources.”
The threat of Covid has made many working in retail reappraise their employment situation. Fearful of the potential for harm to their health through virus or well-being due to verbal and physical attacks on staff hitting an all-time high, they have decided not to return to work after perhaps being furloughed. And who can blame them!
As I write I have counted approaching 1,170 risk management jobs on LinkedIn. Businesses are in a recruiting frenzy, because many of the experienced teams that were let go at the beginning of Covid had skill sets that are now desperately needed. But will these new teams have sufficient experience of their new employers’ businesses to make the best decisions?
What the old guard knew to be true the new arrivals will have to work out again for themselves. Inevitably, there will be a step backwards (maybe several steps backwards) before any forward momentum is possible. As we come out of the pandemic, business will need a stable, guiding hand during a period of uncertainty. That is where those with experience can add the most value in steadying the ship.
However, now there is more competition for top talent, including from the third-party security sector. In the future you can expect to find many of the senior people now working for individual businesses to be working for outsource partners who offer risk “On demand services”…
As individual businesses struggle to offer the kind of opportunities that those at the top of the profession aspire to, their talents will increasingly be wanted by outsource partners who can use that expertise across a number of functions and a number of businesses. By spreading the cost across multiple business users, outsource partners can offer top talent the sorts of rewards it deserves whilst reducing costs for individual businesses and keeping all stakeholders happy!
At its most basic, ‘On Demand’ is outsourcing Loss Prevention/Risk Management functions to an organisation that performs that function more cost effectively than any business could do themselves in the current climate. At its most complex, operating a total loss model of risk management, most of the risk management functions are performed by a third party reporting to a senior risk executive in the businesses’ senior management.
Either way, using specialist help that is serving multiple clients means a reduction in cost with a simultaneous improvement in service levels and continued benefit for the business of retaining all risk management functions… and under the auspices of the Risk Management Department.
The downside? Recruiting and retaining your own in-house talent is going to become even more difficult than ever it was previously.