Salmon farming and forest management hold lessons for financial services industry
Zurich - The World Economic Forum today publishes Rethinking Risk Management in Financial Services, a radical rethink of risk management in financial services, drawing on experience from salmon farming, forest management, aviation regulation and the human immune system among other business areas, walks of life and ecosystems.
The report has been drawn up under the guidance of a steering committee co-led by Axel Lehmann, Group Chief Risk Officer of Zurich Financial Services Ltd. It was tasked by The World Economic Forum to reflect on the events in the financial markets since 2007 and address the question: what can the financial services industry do to better monitor, manage, and maintain the resilience of the financial system?
The report argues that the recent financial crisis has exposed many weaknesses in risk management within the global financial system. However, given there have been 88 banking crises over the last 40 years, according to the International Monetary Fund, there was a need to address deeper problems.
In an innovative approach, the report analyzed seven domains outside financial services, including the effect of a virus on Chilean salmon farming, how the World Health Organisation helps countries to develop action plans for pandemic alerts, how the human immune systems reacts to new pathogens and how the US manages aviation regulation.
Among the risk management experts’ more unconventional suggestions are for the aggregation of system-wide data. The concern is that it could turn into an excessive reporting burden for companies, but, if sensibly done, it could provide an important tool for risk managers.
Axel Lehmann, Chief Risk Officer of Zurich Financial Services Ltd and co-chair of the steering committee, said, “Our goal is to provide food for thought rather than an off-the-shelf solution. Many of the outside practices explored diverge from current thinking in finance. Though some ideas highlighted are controversial, it is our intention to stimulate, provoke, and challenge - and by doing so to help transition the financial system to a more secure and sustainable state.”
“Risk management has many dimensions. This report shows how risks are successfully absorbed in situations and under circumstances entirely different from those faced by financial institutions. There are vital lessons to learn from these findings, particularly the ones that deviate from the conventional wisdom proffered in our industry,” Mr Lehmann concluded.
Note to Editors:
A copy of the report is at http://www.weforum.org/pdf/FinancialInstitutions/RethinkingRiskManagement.pdf.
A Q&A with Axel Lehmann on Re-thinking Risks is at www.zurichriskdebate.com/
For more information please contact:
Mani Pillai, Zurich Financial Services Ltd, Head of Group Media Relations, United Kingdom at + 44 20 7648 3933 or email@example.com
Zurich Financial Services Group (Zurich) is an insurance-based financial services provider with a global network of subsidiaries and offices in North America and Europe as well as in Asia-Pacific, Latin America and other markets. Founded in 1872, the Group is headquartered in Zurich, Switzerland. It employs approximately 60,000 people serving customers in more than 170 countries.
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