Risk Resilience Diagnostic
While Marsh LLC has long focused on helping companies strengthen their resilience to risks that may affect their organizations, the COVID-19 pandemic helped shape a new diagnostic tool from the broker and promote its further development.
The crisis increased the realization of the broker and its clients that there was a gap in identifying the intersection of risks along an organization's value chain, says Reid Sawyer, Chicago-based head of Marsh's new risk group. The pandemic showed how the lack of such knowledge can hinder risk management, and it gave rise to the final version of Marsh's Risk Resilience Diagnostic tool, he said.
"Pandemic is a system-level risk that really challenged our customers to think about stressors in their value chains," says Sawyer. For example, "we had a similar ransomware epidemic while we were in the middle of the pandemic," and supply chains were increasingly disrupted, he said. "It really raised the idea of risk-taking addiction."
Introduced earlier this year, the Risk Resilience Diagnostic tool, a winner of a 2021
Marsh's tools enable risk managers to investigate the relationship between six categories of risks: pandemic; cyber; emerging technology; regulating; geopolitical; and climate / environment, social and governance. It analyzes the potential effects of the new risks as they intersect across a customer's organization to impact its physical assets, supply chain, human capital, reputation, stock price and other areas, Sawyer said.
The tool collects information through a self-directed survey that can contain input from several stakeholders in an organization. The input forms the basis for the risks resilience response, which includes an overview of how to read the diagnostic results, a resilience point for each hazard and benchmarking data that shows points per industry. The results are intended to be shared with senior leaders and board members to promote resilience discussions.
"Resiliency should not be seen solely through the lens of recovery time, response capacity or redundancies – the ability to rise after being knocked down, which is all too often how we have defined it," Sawyer said. "Instead, what we do in the report and what we measure come back to the ability to perform during crises and long-term difficulties as what we have seen in the last 18 months with COVID-19."