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Sofia van Berlekom: Why Risk Management and Business Continuity Must Exist Together

The last 18 months have been synonymous with risk and uncertainty. More organizations are pushing risk management initiatives to the top of their agenda to prepare for unprecedented threats in the new world of work.  

In this article, we share highlights from our conversation with Sofia van Berlekom, Risk, Business Continuity and Compliance Director at AstraZeneca Sweden Operations; on emerging risk & compliance trends, effective risk & compliance communication and the importance of risk management in business continuity.  

 

Risk as a Vital Process in Business Continuity 

An effective risk management system not only protects an organization, but helps in recognizing new market opportunities. According to van Berlekom, “The pandemic has taught us that we have a lot of common risks and compliances regardless of business sector. But there are opportunities as well, not just risk and compliance issues that have emerged.”  

Risk management is one of the most vital processes companies can do, allowing them to be prepared and mitigate whatever they can in a proper fashion. “Business continuity and risk are linked from a risk perspective, and you know what to focus as resources never are unlimited.,” van Berlekom says. When it comes to allocation of resources, she stresses that “it’s also about priorities, and not wasting resources on something that is not needed.” 

A high level of organizational flexibility is needed for viable business continuity, especially in the wake of a global health crisis. “With the pandemic hitting hard, it was important to be agile and be able to think differently,” van Berlekom says. 

 

Communication Challenges in the Risk Space 

NAVEX Global predicts a rise in Chief Risk Officer (CRO) or Chief Risk and Compliance Officer (CRCO) appointments in the next few years. More organizations will have a more holistic risk management strategy, integrating compliance, IT, operational, reputational, third-party, and ESG practices. The success of this rests heavily on effective communication and van Berlekom says it’s much broader than the 3LoD.  

“Communication around risk is difficult because it’s a specialized area. It’s also an area which is very general and generalized in the everyday life of people.” There is difficulty speaking the right language that can be understood company-wide. “It’s quite easy to get people confused when you’re talking about business risks compared to the general risks people encounter in their everyday life,” van Berlekom states.  

“Risk & compliance managers on all levels need to practice good oversight without getting lost in the details,” van Berlekom adds. In risk management, a big communication challenge is to find that balance and ensure employees understand “what they can do and what they are obliged to do.” At AstraZeneca, risk identification and risk discussions are incorporated into the tier structure. Regular meetings are held where questions such as “Has anybody seen any risks?” and “Are there any risks that should be mitigated?” are commonplace. Risk awareness at all levels of an organization will improve decision-making and support a culture of innovation. 

 

Effective Digital Tools in Risk & Compliance  

The shift towards cloud technology has resulted in an exponential increase in data. There is a high demand for trusted data for compliance purposes in addition to real-time data to deal with unexpected events. Therefore, companies need to have a good grasp of technologies that can help them understand and interpret important data about potential risks. Another use of digital tools in the risk space is to increase transparency, according to van Berlekom. 

Here are the top technologies used in risk & compliance: 

  • Robotic process automation (RPA) is helpful in automating rules-based GRC processes. With RPA, all business tasks can be managed through a single device, effectively facilitating compliance.  
  • Advanced data analytics in risk data management is useful for predicting, measuring and reducing risk. 
  • AI and its subsets — machine learning, and natural language processing — can be applied to large data sets to help find indicators of known and unknown risks. 
 

Risk & Compliance in 2022

“The digital world presents a lot of threats such as cyber threats and information threats,” van Berlekom says. It is no secret that the remote working environment brought IT risks such as data breaches, policy violations, audit failures, and third-party risk to the GRC space.  

Therefore, it makes sense that cybersecurity is now weaved into an organization’s risk management strategy. “At AstraZeneca, digital threats and cyber threats are a part of our risk landscape. We also have the IT department connected to the global operations network, which means that it is a natural part of the risk discussion,” van Berlekom states.   

In addition, van Berlekom says that the effects of the global political landscape should not be underestimated, as they can impact an organization’s operations and value chain. Moving forward, companies must be aware of the latest developments in today’s geopolitical environment and the possible regulations and enforcements that will follow. Risk & compliance officers must also extend their expertise to supply chain teams to build a strong supplier risk management strategy.  

 

Risk management professionals will play a key role in creating future-proof business continuity plans alongside C-level peers. As workplaces continue to evolve, risk & compliance initiatives will remain a priority as organizations find new and innovative ways to do business. 

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Towards Supply Chain Resilience: Highlights from Nordic StrategyForum Supply Chain and Procurement

At the recent Nordic StrategyForum Supply Chain and Procurement virtual event by Management Events, supply chain decision makers gathered together for interactive discussions on rising trends and concerns.

Covering issues from business adaptation and remote working to management styles, in-depth insights were abound throughout the discussions.

 

TAKING ADVANTAGE OF CHANGES

 

As one of the largest disruptions that the supply chains have ever experienced, the COVID-19 pandemic took many companies by surprise with challenges such as the availability of materials, pricing, and delays in new vendor development.

A Chief Supply Chain Officer (CSCO) observed that every 5 to 7 years, there’s some kind of event that affects the global supply chain, like the 2010 Icelandic volcano eruption and the 2011 tsunami and Japanese nuclear reactor disaster.

But the disruptions caused by those events lasted for about a month, whereas with the coronavirus outbreak, the disruption has lasted more than 7 months so far with no near end in sight. Many supply chain leaders expressed that the ensuing supply chain upheavals were unexpected and unprecedented.


Management Events’ Nordic StrategyForum Supply Chain and Procurement

 

For instance, there was suddenly a drop in the availability of pallets, containers and packaging. As one attendee mentioned, “There were premiums on getting containers, leaving our goods stranded in production countries.”

“Then there was the increase in demand for toilet papers, consumer goods, home office equipment and medical goods while demand for cars and machinery suddenly halted. These were very volatile times.”

In regards to that, a participant shared that being closer to the end market is vital at the moment.

 

“We have to understand the demand picture and be more involved in how supply is working. We also have to understand the customers’ needs and be even more service-minded about fulfilling the needs.”

 

The disruptions that emerged from the pandemic were also concerning for supply chain executives as countries experienced waves of the virus and lockdowns at different times.

“The crises you are working on keep changing,” voiced a supply chain leader. “From March, you try to stay ahead and stock up on the right products in the right location. Spring was quite good, but then suppliers were forced to close down so even if you have the chain open, production has stopped.”

 

Others expressed the same sentiment:

  • “There are always new things coming up, always a new hurdle to go over.”
  • “There have always been hurdles in the supply chain, but now they are coming at a faster pace.”

 

However, some have taken the changes in stride, learning from the first COVID-19 wave and preparing for growth and agility opportunities:

  • “These changes have forced us to make faster decisions, but this is also better decision-making.”
  • “We have become more sustainable as a company, going from supply chain via air to sea.”

 

As commented by a top supply chain manager, “It is volatile now, but in the long term, this will stabilize,” and while the pandemic was a shock back in March, the shifts undertaken were “mostly minor permanent changes”.

 

Join us: Don’t miss the next Nordic StrategyForum Supply Chain and Procurement coming in October 2021 for the latest trending supply chain issues and topics.

 

RISKS AND RESILIENCE

 

“This is a ‘new normal’. Will this affect the way we think about risk?” one of the leaders questioned. “Will this lead us to be more resilient in the future?”

According to a participant, COVID-19 offered a chance to reconsider risk strategies and situations, such as the risk of no delivery from a cheaper, offshore delivery versus a more expensive but guaranteed, nearshore delivery.

Another risk assessment includes planning supply chains amid local lockdowns of regions, countries and hubs. As a decision maker probed, “If a hub is locked down, how do you ensure supply chain from other locations?”

This is a particular concern with the participants because the lockdowns affect various parts of the supply chain at different times and in different countries.

 

“There are lockdowns that stop delivery of raw materials, lockdowns of factories, and lockdowns that stop shipments, so it’s not a lockdown that happens all at the same time, but in random order.”

 

A supply chain manager commented the challenge was bigger for those who source products from European suppliers while another specified that, “Electronic products were the most difficult to obtain as they all come from Asia.”

Others related that Tier 2 suppliers were the actual challenge with the participants encouraging end-to-end talks to better connect the supply chains and searching for source alternatives to ensure sustainable supply chains for the future.

There were other topics brought up during the discussion on risks. One of which was the leverage and advantage of having a decentralized supply chain model, and the other was on the issue of Brexit, which a top-level executive stated is a big risk within the supply chain.

 

 

REMOTE WORKING

 

Many of the participants mentioned positive factors about their current work situation, citing efficiency, savings on time and costs, and faster decision-making as some of the upsides of remote working.

“Remote work is surprisingly good,” exclaimed a CSCO. “For global supply chain, you were already used to working remotely with global teams, but this change has intensified the investment in tools and processes for better remote working.”

“People working from home meant quicker implementation of digital solutions, and employees are more willing to use these new tools.”

Another reported that, “From the HR perspective, it turns out that remote work is a competitive advantage for white-collared workers. Alot of employees enjoy working from home due to the balance of work and family.”

However, there are concerns with remote working.

“In Europe and the USA, there’s an issue with ergonomic working spaces at home,” an attendee shared. “While in other parts of the world, such as Africa and Asia, there’s an issue with local internet connections and connectivity.”

Others shared that it’s hard to conduct remote team building, and that some employees are still unused to virtual working. Furthermore, even with the benefits of remote communication, there is still the need to have real meetings and contact with colleagues and customers in the future.

 

Upcoming events: Network with decision makers and solution providers for more in-depth insights in our supply chain events in Germany, The Netherlands, Sweden, and Finland.

 

DIGITALIZATION IMPORTANCE

 

As can be seen in many industries, the implications of COVID-19 drove huge advances in digital progress, and decision makers in the supply chains agreed that digitalization is one of their most important projects and investments.

“The crisis led to rapid developments in virtual inspections through camera, with video meetings allowing us to record what is seen and said during the inspections,” a C-level executive revealed.

“It saves a lot of time compared to sending people around the world. Of course, we still need to go there, but first checks can be done virtually even if final checks are done in-person.”

Nevertheless, supply chain organizations have to step up with the digital processes and routines to ensure they are continuously updated with all the markets and functions in their company.

 

 

CHANGE IN MANAGEMENT STYLE

 

While many of the participants mentioned that their companies have taken the opportunity to develop their workforce and invest in educational and university courses for their staff, they have also made changes to their leadership style.

A senior executive commented that calm management is the key in handling this large and demanding crisis. Others agreed with the statement, claiming that leadership in general is vital – not just with the team but with suppliers as well.

Some explained that their management approach has changed into a more coaching style whereas others were focused on promoting better team spirit and culture by having daily meetings to produce more efficient employees.

However, similar to the discussion findings in Sweden 600Minutes Executive IT, the biggest management challenge is with new employees, from remotely onboarding them to building team rapport from a distance.

 

 

THE FUTURE

 

As the world moves into 2021 with the coronavirus still affecting businesses around the world, supply chain leaders need to make preparations for multiple case scenarios coming in the future months.

From new waves of the virus and the facilitation of the COVID-19 vaccine to implications from loosening lockdowns and repeated changes in customer demands, sustainable and resilient supply chain solutions will undoubtedly be foremost in the minds of Chief Supply Chain Officers.

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Risk Aversion vs Growth: Showing Decision Makers Opportunities In Crisis

It cannot be denied that COVID-19 has greatly impacted the business landscape. 

Budgets and forecasted revenue have gone off course from their projected paths while business priorities and investments are shifting due to the vastly different economic conditions than what was anticipated for 2020.

Due to uncertainties brought by the pandemic, C-suites are focusing on conserving their cash flow and holding off on investments to keep further risks at bay.

In light of the current buying patterns, how do you persuade decision makers that your solution can be of immense help to their business continuity and growth? How do you reverse their risk-averse decision making?

 

Financial Uncertainty

 

Excluding industries that are thriving or unimpacted by the outbreak, the majority of businesses that are negatively affected have taken steps to tighten their financial belts.

According to our latest Executive Trend Survey with over 1,100 decision makers, 59% of top-level executives across Europe are revising their budget plans to ensure business continuity while 42% are preserving their cash flow.

The budgeting strategies are due to expected revenue drops in the coming months, whereby 44% foresaw an economic downturn in the next 6 months while 22% estimated decreased revenue throughout 12 months.

The financial setback is also affecting businesses’ financial plans for 2021 with 38% predicting a lower budget for next year, thus explaining the aversion to taking risks in technology and solution spending.

 

More Stakeholders Involved

 

 

Cost-saving measures and coronavirus aside, businesses have also been seeing a longer decision-making cycle as more stakeholders are involved in investments and spending strategies.

Back in 2014, the average number of decision makers in a purchase was 5.4, but has since risen to 10.2 in 2018, which can include multiple C-levels, executive board members and senior managers. When more individuals are involved in a purchase, the situation can become complex as each person has their own goals and objectives to achieve.

 

“As more decision makers join the debate – procurement, finance, legal – so the decision-making process becomes extended and watered down.”

– More Decision Makers. Less Decisions

Seraph Science

 

For instance, Gartner reported that CMOs expect to increase marketing investments in 2021, but with the ongoing pandemic, “CFOs will turn their attention to profitability, and marketing [tops] the list of functions where finance will look to trim expenses even further.”

Although both hold high C-suite positions, the two have different priorities as the CMO is looking to advance the brand while the CFO is focused on minimizing costs. This difference leads to struggles in reaching a mutually agreeable purchasing decision.

 

Attend our events: Get more insights on C-suite business needs at our upcoming events.

 

Reset Their Thinking

 

When diverse C-levels come together on a possible purchase, they usually settle on a decision that saves money and avoids risks.

While almost all the decision makers may find this outcome desirable, it may not necessarily be favorable or progressive for their business growth – and that is what you need to show them.

Let’s take marketing for example. During the coronavirus outbreak, only 7% of companies have seized the opportunity to invest more in marketing whereas 50% of brands have cut their marketing budget. However, budget cutting may not be the most strategic move.

According to Roland Vaile in his published work, The Use of Advertising During the Depression, businesses that increased their marketing and advertising spend during the recession saw faster revenues and recovery than their counterparts.

The same sentiment is also expressed in a recent post  by Peter Field, a marketing and advertising professional, whereby “if the resources are available, the arguments in favor of brand building are stronger.” 

Another case example is the cutting of cyber security budgets, which Chief Technology Officer of Barracuda, Fleming Shi, sees as a bad move as hackers are taking advantage of the pandemic to target vulnerable organizations.

Show decision makers that they are facing higher risks and greater consequences should they decide to save costs and not spend on solving important pain points.

 

Find Their Direction

 

Market experts believe that organizations should take this chance to invest in opportunities that were once hidden or were not in the forefront of their business plans, such as retraining and upskilling employees, integrating digital innovations, and developing e-commerce business models.

Some companies are also seeing business gaps and weaknesses due to COVID-19 implications, and are taking steps to rectify these concerns, including strengthening cyber security and updating data analytics.

As pointed out by Arthur D. Little’s article, the key is to make decision makers “look beyond the short-term crisis and start preparing for the new world” with focus on both obvious business trends and major areas of uncertainty.

No matter how much organizations want to save their budget, there comes a point when they must spend in order to continue their business growth or be on the road to recovery. Discovering their direction and going deeper into their needs help greatly in knowing the exact solution they require, and the risks they face if they don’t address their concerns.

 

Get more insights: Attend our events for the latest trends and topics on the minds of C-suites across industries.

 

Identify The (Real) Stakeholders

 

According to Google’s B2B Path to Purchase Study, 64% of the C-suite have the final say in signing off a decision, and among them are risk-active, risk-neutral and risk-averse decision makers.

CEOs tend to be relatively risk-neutral, but senior managers and other C-level executives who are not comfortable taking risks in business decisions may need more convincing. Therefore, determining the right executive sponsor and key budget approver of the project is pivotal in preventing delays in deal closings and moving investment discussions further down the pipeline.

In cases where the executive sponsor and approver are individuals with aversion to risks, involving ‘influencers’ in the decision can help the risk-averse chief executives to better see the benefits and returns of an investment. A total of 81% of non-C-levels actually have a say or influence on a purchase, and are able to convince the key approver on the final decision.

 

“Clearly, if you’re marketing only to the highest level, you’re overlooking the people who need to notice you.”

– The Changing Face of B2B Marketing

Think With Google

 

To Push Or Not To Push

 

The answer is not to push, but to assist. If they have available resources, organizations should take this time to implement technologies and solutions that have been held back in their plans.

As solution providers, the goal is to make the decision makers see beyond their current predicament and risks, and focus instead on growth potentials to strengthen their market standing and get a lead on their competitors.