Social Risks for financial institutions - The Dialogue Podcast

Reading time: 3 mins

The next instalment of the Dialogue Podcast series explores why conventional risk management may be failing Australia's financial institutions, which have been subjected to scorching community and government criticism, tougher regulations, and now a Royal Commission.

In the podcast, Rick Shaw (Partner at Deloitte) questions Ian Laughlin (Chairman at OnePath Life and ANZ Lenders Mortgage Insurance) on the ideas in his Dialogue thought leadership paper 'Social Risks - for a financial services business'. 

In his paper, Ian says institutions do not seem to be effectively managing the risks that come from swiftly changing social norms and attitudes in the contemporary world.

“The new world includes access to huge amounts of information, [we] communicate in ways that [were] unheard of before …Twitter, the use of facilities like Facebook to spread an opinion, capabilities like phones, everybody’s got a phone in their pocket and so things that might have escaped scrutiny in the past, don't escape scrutiny anymore,” says Ian.

Acknowledging the changed ‘risk profile’, Rick asks:

 “Do we have the existing frameworks and the existing institutional culture to allow us to respond to generational changing and attitudes towards government and large institutions or is something more radical needed?” 

Rick and Ian discuss how institutions have failed in identifying new risks, such as social media, the spread of fake news and ‘reverse fake news’.

Ian highlights the importance of forward looking ‘risk sensing’ to manage social risk, rather than simply following “conventional risk management [where] the risks are monitored in arrears”.

To help provide insight into social risks Ian produced 14 labels for types of social risk that include:

  • cynicism risk
  • true values risk
  • insight risk
  • tolerance risk
  • self awareness risk

Ian debates in the podcast, various reasons why institutions could have failed in their current framework by not acknowledging all associated risks:

"I don't think organisations have those deep insights at the moment or even the capabilities to get those deep insights and it's not clear where you might get those capabilities so there you have a conundrum; how does the industry develop these capabilities that properly assess and manage these risks?"

Despite the current challenges, Ian is optimistic that with the correct resources and risk management framework, companies and institutions can repair their reputation.

Listen in to find out more on Ian's research and recommendations on how financial institutions can manage existing social risks and prepare themselves for the uncertainties of future risk management.


Listen to 'The Dialogue - Social Risks' on Spreaker.

Download Transcript here.

Access the Paper and Media Release here.

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About the authors

Rick Shaw

Rick is a partner of Consulting and part of the Actuaries practice. He has extensive overseas and Australian experience, and is recognised internationally for his work on capital modelling, regulatory systems and pricing and valuation. Rick’s primary focus is developing management information systems and integrating capital models into companies’ decision making. He has also advised regulators on actuarial valuation standards and capital model approval.

Ian Laughlin

Ian Laughlin has a deep interest in risk management and risk culture - particularly in the financial services world. He has had a long career in financial services senior management and board roles, in various countries. He currently chairs the board of a group of insurance companies owned by one of the major banks.

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