Last week, Lloyd’s Banking Group in London announced that they are restructuring their Risk department, citing that 2/3 of all executives find that risk management is an obstacle. When I first read that, I gasped for just a second. All of us in risk management and related fields have heard this. We’re an obstacle, we’re overdoing it, is that really necessary, the other organization down the street isn’t doing it, etc. etc. For us, it’s part of our job - overcoming objections, creating buy-in, explaining to the organization why we’re really not an obstacle. It's exhausting at times, and it's a topic that consistently comes up in our space.
I have since read several posts on LinkedIn debating this approach that Lloyd’s is taking. Some say we as risk managers need to watch out, and that our jobs are becoming a “problem.” Others think that Lloyd’s is acting prematurely and that it will backfire. Reading some articles on the topic, it sounds like the bank will create 130 new roles that are more specialized and technology focused. It makes perfect sense when considering that they launched a plan in February 2022 to invest £4bn over the next five years to diversify away from interest rate-sensitive income streams like mortgages and become a “digital leader”.
Not knowing exactly how Lloyd’s risk department is structured, one can only make assumptions. Looking at their strategic direction it makes sense. Considering that they’ve had their fair share of regulatory issues makes one wonder though. What we do know for a fact is that risk management continues to be looked at as an obstacle and that’s a global phenomenon. Do I believe that our profession is all of a sudden at risk? Nope. Do I believe that we have to continue to evaluate our approach and always focus on how we provide value? Absolutely.
Because what’s the alternative? While audit can cover some of what we do in risk, their skillset and roles are vastly different. Their need for independence and their approach that’s always limited by scope (in my humble opinion) does not set them up to be successful at true risk management. And let’s face it, when was the last time audit didn’t catch the same “y’all are an obstacle” response we in risk management are so familiar with? They’re fighting the same battles, even though I believe they are actually better equipped to fight back. (A whole other topic right there)
I say this a lot and I will continue to say it - we as risk managers have to focus on being enablers. We have to continuously ask ourselves how we support the strategic goals of the business. How do we support decision making in the organization. And if our message isn’t resonating, we need to change our messaging.
What I believe Lloyd’s is doing is being forward looking and focused on strategic goals. They realize that playing in the digital landscape will require specific skills on their risk teams and they are creating the positions for that. Will it change the organization’s perspective that risk is an obstacle? That all depends, as us risk folks like to say…..
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