Managing risk is need of the hour

Marsh PB chief executive Robin Armstrong said although his company has long been one of the world's largest insurance brokers, a major objective today is to help clients manage risk.

When a company successfully identifies its corporate risks, it can gain a competitive advantage over competitors, Armstrong said.

"One of our goals is providing risk-handling strategies, for which no insurance polices have been invented," he said.

These risks include ones associated with having key executives hired by competitors or the potential damage to a company's image if it takes on an environmentally challenging project, such as drilling for oil, he said.

Armstrong said many managers today often associate "risk" with external hazards such as extreme weather or terrorism and can easily forget what are often more critical "strategic" risks.

Strategic risks usually target one or more of the crucial elements of a company's business model.

Not all businesses face every form of strategic risk, but all companies face some.

"The seven major strategic risks are: project risk, customer risk, transition risk, unique-competitor risk, brand risk, industry risk and stagnation risk," he said.

"We want to help companies discover the upside potential concealed by the frightening mask of downside risk," Armstrong said.