'Expand your horizons' urges Airmic chairman Nicola Harvey

Diversity in risk management practices and approaches was recently highlighted by the World Economic Forum as a vital way to avoid some of the problems thrown up by the financial crisis. Airmic’s new chairman, Nicola Harvey, who is also group risk director at Christie’s, knows all about this.

Her expertise is derived from a career that spans the insurance aspects of risk management as well as senior risk roles in a global engineering firm, a major bank and, most recently, the famous auction house.

Harvey started her professional life in insurance broking as a graduate trainee. She cut her teeth developing insurance programmes for large clients, as well as running teams of brokers. In 2000, one of her clients approached her and asked if she’d like to be their risk manager.

“I joined to set up the risk architecture in, essentially, a new outfit,” she says. The company was Kidde, which made global fire protection and suppression systems. At the time of hiring Harvey, it had undergone a demerger from a conglomerate to become a listed company.

“The finance director was keen to establish a risk management function,” Harvey says. “There were lots of interesting risk issues to deal with in a large company with a wide geographical spread.”

Harvey then moved into telecommunications, becoming risk and insurance manager with Cable & Wireless. She remembers the role less fondly than others as she spent much of her time dealing with fallout from Pender Mutual Insurance Company. This was a flagship telecom mutual that Cable & Wireless was instrumental in setting up. “It got into a lot of problems around a series of large losses. Perhaps the participants hadn’t appreciated what a mutual was about and they were on the hook for losses that some of the other companies had suffered,” Harvey explains. “A lot of my time was spent sorting out legacy issues related to that.”

Moving on

Harvey’s next move was to Lloyds, the banking group. “It seemed like a good opportunity to get into a bigger organisation,” she says. Harvey joined just as the banking industry was struggling with Basel II compliance. But her job was to head the risk transfer unit, so it is hard to pin any of the blame for the financial crisis on her shoulders.

“I was involved in getting the insurance market to understand Basel II. In order to mitigate what the bank needed to do in terms of capital adequacy under Basel II, it could use insurance. The insurance programmes had to work in a certain way and that meant we had to negotiate with our insurers to get some things that weren’t the norm.”

Just as the banking crisis was reaching its zenith in October/November 2008, Harvey joined Christie’s. “It was a bit of a departure, ” she admits. After two years in the strange world of global finance, what attracted her to Christie’s was the tangible nature of the business and the “fantastic opportunity to be surrounded by beautiful artwork”.

Have skills, will travel

Many of the skills that risk managers develop are portable between organisations, says Harvey. Experience in different industry sectors is invaluable. “Personally, I like the variety and challenge of a new organisation and working in a new sector. Because of the sort of role lots of us do, you get to a certain point and the natural progression is to go and do something similar in a different sector.”

She now works closely with Christie’s legal risk department, which has started to expand into compliance and audit as well as already dealing with corporate, art and employment law before she joined.

Harvey is also trying to move Christie’s towards a more risk-aware culture, with a consistent, robust and formalised approach to risk management in terms of identification and assessment, which wasn’t prominent before she arrived.

“Of course, Christie’s did do some risk management before I arrived,” Harvey says. “There were existing security teams who do a lot around the handling and protection of artworks when they are in our custody and control.”

Changing behaviours

Primarily her role is about making sure everybody in Christie’s understands the need for risk management as opposed to relying on the protection that insurance provides, which is very well understood in this sector, she says. “Insurance is used in the art world quite a lot, so historically there has been less emphasis on risk management and more emphasis on using the traditional insurance market.”

Changing behaviours is her biggest challenge, as well as getting employees to understand why risk management is important and improving accountability. “Risk managers should increase their focus on culture issues,” she says. It’s this idea that is set to define her leadership of Airmic, the UK’s risk and insurance association. ‘Embracing new horizons’, is the tagline she’s chosen for her chairmanship.

“Embracing new horizons is about how can we make ourselves, as risk managers, more relevant and have a seat at the table in terms of strategic thinking and business decision-making, rather than being an afterthought, which I suspect is sometimes the case at the moment.”

Know your business

She blames this situation on a dearth of soft skills, such as communication and negotiation, among members of the profession. “We don’t always do a good enough job of really getting under the skin of the business and understanding it,” she says. “Central functions like risk can sometimes sit in isolation.”

One of the dilemmas for risk managers is that they need seniority to grab people's attention and change cultures. Unfortunately, risk management is more often than not a middle-management function, but this is changing. “We are increasingly seeing risk managers who are more senior,” Harvey notes.

She also wants Airmic to work more closely with other professional groups. She thinks there’s a lot that risk managers can learn from other disciplines, such as law, health and safety and finance. “Just because we are called risk managers doesn’t mean we have a monopoly on everything to do with risk. It has to be part of the whole organisational psyche and how it operates. It is more about being an influencer.”

Not just a luxury

Fulfilling this influencer role is key to the survival of the profession, thinks Harvey. Now is a difficult time for the profession as many risk managers are seen as an expensive luxury whose work can easily be outsourced. Harvey argues: “Insurance is more easy to outsource to a broker but risk management is not something you can effectively outsource.”

She says risk management needs to be embedded into the business and only someone from within the organisation can do that properly.

Harvey thinks risk managers can avoid the chop by making themselves an integral part of decision making and providing useful advice to management. Unfortunately this is much easier said than done. Airmic, she says, stands ready to help them do it. IT