After one year of living through a global pandemic, COVID-19 has impacted countless aspects of our professional lives. With businesses facing unprecedented disruption and planning for an uncertain future, risk management practice must adapt to meet these challenges.
Risk Management Expert and Director of Risk Control Consulting, Mirela Derrin, says the ability to adapt risk management strategies to suit the current environment is critical in executing successful engineering projects.
“The new conditions polarised the engineering environment in a way we have never seen before”, says Derrin.
“Demand for critical industries and projects increased to new record levels, while others experienced a significant slow-down.
“Both of these environments have their own set of risks that in many cases could only be identified and managed by engineering professionals.
“The success by which the projects and organisations managed their operations through different stages of last year’s interruptions and lockdowns depended on the quality of the risk management consultation process, agility and clarity of their internal systems, and attitude to managing threats.”
As a result of the new conditions, three major risk management focuses were identified in the latest 2020 Enterprise Risk Management Survey conducted by RCC (Risk Control Consulting):
1. Companies fully or partially integrating Risk Management in their day-to-day activities increased by 26% as a result of the pandemic
For many, COVID-19 identified potential weaknesses and risks that may have previously gone unnoticed. Given this, it is unsurprising Risk Management is now integrated across day-to-day activities to a greater extent.
The need to deliver products or services during unprecedented times made companies and projects define new internal and external systems, which were immediately put to test to identify and manage new and existing risks.
“Not only do we live and work in a complex global environment, we also witness the difference between those managing their risk and exposure successfully and those not being able to identify and implement necessary frameworks.
“Last year’s conditions emphasised the importance of clearly communicating identified risks through all levels and projects, including supply chain.
“Implementing risk mitigations had to be done decisively and effectively, with obvious and immediate results; for engineers this meant the frameworks had to be effective and easy to implement.”
2. More senior leadership teams and boards are applying Risk Management insights to business decisions
There are many examples of industries experiencing heavy losses after failing to identify or prepare for the extraordinary change in their environment. However, there are also examples industries who had recorded these events on their risk registers and strategically positioned themselves to absorb potential interruption and capitalise on potential opportunities.
Derrin said “what I personally find the most fascinating is that the companies that continued to evolve through every change had adopted processes which treated the change as a constant”.
“This marks the next stage in maturity of not only dealing with risk but improving the quality of the decision-making process in general – it is encouraging to see many companies shifting their decision-making frameworks.”
For engineering teams, it is more important than ever to demonstrate that they have applied risk management principles across their work.
“It is important to ensure continuity of two-directional flow of information, including the engineering teams informing the enterprise risk management framework, consolidating and addressing targets, and providing clear policy instruction to the engineering teams for the implementation.”
3. Health and Safety (OHS) and/or business continuity (BC) have become a primary focus of the Enterprise Risk Management
Key priorities often become clear in times of crisis. As a result of the pandemic, we can conclude that OHS and business continuity are generally identified to be at the core of the organisational survival.
As Derrin points out, this is not entirely new for the engineering professionals who deal with these two topics daily, especially as OHS is applied at all project levels.
“My local experience of visiting, assisting and assessing national businesses through Risk Control Consulting demonstrated there was a great amount of good will already existing in relation to OHS, which enabled us to implement those frameworks quickly and efficiently into new reality.
“Though business continuity has different dynamics that depends on a number of external stakeholders, we are being more efficient in responding to this as well, with some great local examples of how challenges have been turned into opportunities.
“Linking these initiatives permanently into the Enterprise Risk Management is now the priority.”
Mirela Derrin is a Risk Management subject matter expert facilitator with Engineering Education Australia. You can learn more about risk management from Mirela's webinar recording, Risk Management Principles.