Firms urged to develop risk culture

dubai — For any company to be successful today, there needs to be an effective risk management framework in place, says Ali Al Muwaijei, senior vice-president of corporate support at Dubai South.

Speaking at the 2016 Middle East RIMS Risk Forum, Al Muwaijei observed that having a good risk culture separates a successful company from an unsuccessful one.

Al Muwaijei also stressed that risk management is not only important at the corporate level, but that it should also be the responsibility of everyone within the organisation.

“People need to be educated about risk management, and for that, there needs to be a risk culture. From the top management to all the way down in the organisation, all employees have to be educated about the risks they might be faced with.”

He added: “Risks are everywhere today and it is very important to understand what are the right channels available for us to learn from incidents that happened in the past that ended in catastrophe. By observing what happened in the past, we can come up with solutions as to how we could have done things differently or how we could have avoided the mistakes that were made.”

Expect the unexpected, he advised, giving examples of the scenarios that Ericsson and Kodak were faced with. “What happened with Ericsson was that they relied on one supplier. Nokia too relied on the same supplier, but unlike Ericsson, they had contingency plans in place, which allowed them to scout out other suppliers. This is why they were better prepared for what ultimately happened.”

“Now, what happened with Kodak was that their appetite for risk was very low, and they were comfortable with where they were as a company. What happens when you spend too long in your comfort zone is that you miss out on the opportunities that might be right in front of you. As we all know, a lot of other players saw the opportunities that Kodak had failed to and, as a result, today Kodak is still trying to catch up with its competitors,” Al Muwaijei recalled.

Highlighting why it is important for a company to have a good risk culture, he said organisations need to take risks since it is not feasible to eliminate all of them. In addition, organisations will be exposed to risks. A company with a poor risk culture will have poor communication among staff, lack of insight on important matters, overconfidence in their strengths, under appetite for taking on challenges and slow responses to what goes on around them.

— rohma@khaleejtimes.com