Risk management sees opportunities and threats as two sides of the same coin

  • Professor of Financial Services, formerly associate professor in financial services and risk management at the University of Plymouth
  • Specialised in the management of strategic-level enterprise-wide risks, with a penchant for the human dimension of risk
  • Optimist, team player and lifelong learner in love with Brussels 

“In the early 2000’s I regularly visited Brussels as a British representative for the Reinsurance Directive negotiations. I fell in love with the city and with Belgium as a whole, then and there, and I always thought I might work here one day. My wife also travelled around Belgium and the rest of Europe in a former career and had a similar wish”, says professor of financial services, Simon Ashby, who recently joined us from the University of Plymouth where he was associate professor in financial services and risk management. His special interest is in the management of risk by organisations.

The human dimension

“As a student I was a bit of an idealist”, he recalls. “Although I was interested in business and economics, I didn’t want to become a for-profit business executive. At a conference I got to attend I discovered risk management was a new but growing discipline. I was particularly drawn to the human dimension of risk, i.e. how can we use risk management to protect people, their health and wellbeing as well as their finances. So, from 1992 to 1997 I completed my PhD on risk management, studying why companies should manage risk. You see, there was still very much this ‘so what?’ attitude. Why should we spend all this money on risk management? Why can’t we just push for profit, take risky decisions and make huge amounts of money in the process?”

It turned out Simon did his PhD at the right time: banks were indeed taking high risks investing in derivatives, which did earn them lots of money, until in 1995 Barings Bank collapsed due to fraud. The Basle I Accord imposing minimum capital requirements for financial institutions had been in place since 1992, but it hadn’t been able to prevent this debacle. Inadequate risk management was identified as the cause of the collapse. The desire to significantly improve risk management led to Basle II, in the preparation of which Simon was closely involved, first as an academic and subsequently as a regulatory professional. 

Balancing good and bad risks

“And here we are”, he smiles. “My interests in the field of risk management are broad and encompass areas like financial markets, banking and insurance, and cyber risk. But my core expertise is in the management of strategic-level enterprise-wide risks, which present both threats and opportunities for organisations. Their success or failure depends on how they deal with these risks.”

“In strategic risk management opportunities and threats are two sides of the same coin. Organisations have to take risks to achieve their objectives, be it to grow, reduce costs, increase market share or innovate. The trick is to know which risks are ‘good’ and can provide opportunities to succeed and which are ‘bad’ and may threaten their survival. It’s also important, even for good risks, not to take on too much. Organisations need to control both good and bad risks to achieve the appropriate balance of risk and return.”  

Different attitudes to cyber risk

Cyber risk is a great example of an enterprise-wide risk that presents both opportunities and threats. In today’s increasingly digitised world we rely on the internet and connected devices for almost every part of our lives. And while it makes things easier and more convenient, this digitisation comes at a cost, as Simon explains: “Technology has developed faster than our capability to manage its risk. The problem is not so much a technical but a human one. Hackers and fraudsters are becoming more inventive, it gets harder to spot the difference between a phishing mail and a bona fide one. Organisations are faced with the same challenges. Clients have come to expect digital services 24/7, but, as organisations are mostly run by older, less digital-savvy managers, the associated risks are not well enough understood. And, equally important, these managers don’t fully grasp the opportunities, either. It’s a twin problem, really.”

He pauses and continues: “Older people’s attitude to technology and risk differs from that of digital natives. When it comes to customer service, for example, digital natives don’t mind chatting with a bot. They can’t be bothered talking to a human. They want everything now and tend to value convenience over security and privacy.”

How to deal with political risk

Another current example is political risk. “The political climate in some western countries is much less stable than it used to be. Close to home there is the Brexit issue. While this instability may be welcomed by some voters, it can create big problems for organisations who are having to cope with changing rules on tariffs and trades, wildly fluctuating currency markets or severe labour shortages due to restrictive immigration policies. Now, organisations generally dislike instability, but an organisation with effective risk management could turn these threats into opportunities, for example by relocating some or all of their operations or by making greater use of automation.”

Shared philosophy

Asked why he decided to join Vlerick, Simon says he welcomed the opportunity to work in an environment that focuses on business and post graduate education. “I strongly believe that education has to support practice. Academia and education have their responsibility to provide practical, but theoretically underpinned advice. And this is what attracted me to Vlerick in the first place: we share the same philosophy of taking an academically rigorous approach, but with an eye to providing value to the business, tackling real-world problems.”

He is keen to make his mark: “I’ve found my colleagues here to be highly motived with a strong sense of collegiality and a focus on both teaching and research excellence. I believe that this environment will help me to develop my practice as both a teacher and a researcher, enabling me to support the continued growth of the School. I’m looking forward to adding my own expertise to the mix of existing courses and, in time, to broadening the offer on risk and the management of risk, especially in the area of executive education.”    

Optimist, team player and lifelong learner

Although his research is based on risk, Simon emphasises he is fundamentally an optimist. “As a society we wouldn’t be where we are now if we hadn’t been taking risks. But as the world gets more complex, risks get more complicated. We still need to do more to understand these risks, so that we don’t tread blindly.”

“I’m also very much a team player. I just love to collaborate and to work in a team of equally committed individuals. In almost every part of life we are stronger together, achieving far more when we work side by side. That’s why I feel that it’s important for students to work in teams and learn from each other, especially when they come from different backgrounds.”

In concluding he adds he is a great believer in new experiences to support lifelong learning. “New experiences challenge our perceptions and help us to develop new skills. They also keep us open-minded. That’s why my wife and I both love to travel. Once we’re settled in Belgium, we hope to find enough time to discover new places and revisit old favourites.”

Profile
  • Chairman of The Institute of Operational Risk, UK (2013-2015)
  • Associate Professor in Financial Services and Risk Management, University of Plymouth, UK (2009-2019)
  • Head of Operational Risk, The Nottingham, UK (2005-2009)
  • Senior Manager Operational Risk, Lloyds TSB, UK (2003-2005)
  • Policy Advisor, Financial Services Authority, UK (2001-2003)
  • PhD in Risk Management, University of Nottingham – Nottingham University Business School, UK (1992-1997)
  • BSc Industrial Economics, University of Nottingham – Nottingham University Business School, UK (1989-1992)

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