Is “strategic risk management” just a new semantic spin in theprofession’s ongoing evolution? Or does SRM represent a genuineleap beyond standard enterprise risk management?

At first blush I was skeptical, wondering whether risk managerswere merely seeking a more highfalutin title to raise their statureand demand more compensation.

But after further consideration, I see the potential forlegitimate professional growth if SRM puts risk managers in theroom with senior management and the board of directors when acompany’s course is determined, rather than being relegated to asupporting role and having to account for exposures after strategicdecisions have already been made.

When I first started covering the profession in 1981, riskmanagers were mostly low-profile middle-managers who dependedheavily on their insurance brokers to make basic risk-transferdecisions.

But by the late 1980s, risk managers not only had establishedthemselves as the clear decision-makers when buying coverage, butmany were also quite capable of taking their business outside ofthe traditional insurance markets to form their own captivecompanies.

It took another 15 or 20 years for the profession’s latestincarnation to emerge in terms of enterprise risk management—apoint on the evolutionary scale that many have yet to reach.

Over the last two decades, a growing number of risk managershave graduated beyond standard operational exposures to handleenterprise-wide threats to their companies’ bottom lines. This newbreed deals with supply-chain disruptions, currency fluctuations,political exposures, capital and liquidity problems, regulatorycompliance demands, merger and acquisition due diligence, andreputational risks.

Eager for entry into the vaunted “C-Suite,”a growing number of risk managers have capitalized on theirincreased ERM responsibilities by recasting themselves as Chief Risk Officers. Those anointed with the CRO title doindeed tend to have greater standing within their organizations,with some enjoying direct access to their board of directors.

CROs are further up in the corporate hierarchy and many do havea seat at the table when big plans are made, but they arerelatively few in number. The bulk of risk managers are stillpretty much internal service providers.

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So even though risk managers have already come a long wayprofessionally, the majority of practitioners have a long way to goto become top-level policymakers.

SRM could represent a quantum leap forward for enterprise riskmanagers. Indeed, it’s the logical next step in their naturalevolution—but only if they actually walk the walk, not just talkthe talk.

The biggest complaint I’ve heard from risk managers over theyears is that they get called upon to clean up the mess left byothers who make strategic decisions without considering theworst-case scenarios. That could change if strategic risk managershave a seat at the table when new products are on the drawingboard, new markets are explored, new facilities are opened, and newinvestments are considered.

The challenge facing SRMs will be to raise red flags whennecessary without unreasonably restricting growth opportunities.They also must effectively quantify the value of the work they do:How can companies measure the impact of risks not taken, or oflosses that did not occur due to SRM?

Insurances companies, brokerages, and consulting firms canfacilitate the professional growth of risk managers whilebolstering their own cause by providing new templates todistinguish SRM from its older and still maturing ERM sibling, andby encouraging firms to integrate the new discipline into theiroperations and culture.

There’s really no downside to adoption of SRM for thepractitioner or for those who serve their needs. The more influencea risk manager has in strategic planning, the more capable theywill be in spotting and heading off potential hazards and inlimiting losses, which is the pot of gold at the end of the riskmanagement rainbow.

Sam J. Friedman joined Deloitte Research as Insurance Leaderlast October after 29 years at National Underwriter, where heserved as Group Editor In Chief of the P&C Media Division. Hemay be reached at [email protected].