It seems that the resilience question is trending. Stakeholders and shareholders are raising the resilience issue with companies more and more with each passing day while rating agencies are incorporating the resilience aspect in their grades. However, businesses cannot build resilience while facing new challenges by themselves.
Risk Managers have stressed a lack of support from the EU in anticipating and preparing for upcoming risks. They state that emphasis needs to be put on prevention and acceptance of a legislation concerning inappropriate risk management. Furthermore, in order to support corporate resilience. EU should participate in research funding, promotion of pragmatic actions that risk managers suggest and updating the supply and value chain policies.
On 11th and 12th October in Brussels, the European Talk Show organized by FERMA (Federation of European Risk Management Associations) on the topic “From risk to resilience. Learning to deal with disruption” took place. This was an unconventional event because by gathering Risk Managers and Regulators a dialogue between the two sides was open. In this article we present the takeaways on what European regulators can and should do in order to strengthen not only corporate resilience, but also the European one.
Marosh Shefchovich, the Vice President of the European Commission has presented the plans of the EC on different fronts as a response to risk managers requests. The EC created the network “Ministers for the future” whose goal is to identify new risks, prepare for the next shock headed our way, take advantage of the best opportunities and thus design better public policies. They have defined 10 areas of action which would allow boosting strategic economy resilience in different areas, from the food sector to defense and security. Action n.6 concerns resilience in building better financial systems seen as sustainable investment, environment degradation and climate change have a direct impact on them. For example, the current surge of electricity price is also cause by climate change, since in summer more energy is needed to cool and in winter more energy is needed to heat the spaces.
The “Climate Fit to 55 Package” separates 723 billion Euros from the EU Budget in order to respond to the biggest risks today, focusing on digital and green recovery. The new strategy will therefore further integrate EU trade policy within the bloc's economic priorities as reflected in the Green Deal and the European Digital strategy, specify trade policy's role in the post-COVID economic recovery and support the pursuit of the EU's geopolitical ambitions. The new strategy aims to establish a new consensus for trade policy based on openness, sustainability and assertiveness.
Regarding the supply chain concern, EC states that the pandemics thought them which products are scarce. There are 5.600 products that EU is importing, of which all the raw materials needed for future technologies production are coming from China. In their action plan EC composed a list with the 30 most critically needed raw materials not available in Europe, and an action plan on how to transfer their production here.
EIOPA, the European Insurance and Occupational Pensions Authority stated that their agenda is to include pension funds and insurance as long term investors in society. They have set a plan to insert the Cyber aspect into the requested stress testing methodology. The goal is to facilitate innovation while understanding how can data help and make this innovation useful for the insured. Lastly, in order to ensure continuity they are proposing that local regulators impose policies renewable in longer terms.
Creating pooling re/insurance companies might be another step in creating resilience. However, not all member states have this type of solution set in place. For example, only 2% of the Italian population buys earthquake insurance, which makes it impossible to create pooling. In order to do this there has to be an incentive for the clients.
As one of the countries considered to have handled this period the best, the Slovenia was given the opportunity to present the measures they implemented. The Slovenian Minister of Public Administration, Kortnik, said that they redesigned their public administration and continue to make strong investments in HR. The ministry has set a security management system in place which helped them in identifying and mitigating risks. They also have a network which uses machine learning tools. They believe that digital is the make or break issue and EU should make sure to implement it in all spheres.
The ultimate goal is to create an economy where there are less risk sufferings. The European Union can be the leader in creating resilience because of the attractive internal market However, resilience on an European level can be achieved only if politicians are setting long term measures whose implementation should start now and evolve during the years, instead of being worried solely on current issues with the goal of being reelected.
