Director and Global Head of Risk Management, Turner & Townsend
As our clients expand into new geographies and invest in bigger, more complex programmes, we naturally look to support them in their endeavours.
With these opportunities come risk, whether we’re expanding our footprint, increasing our service offering or embarking on major programmes. This is particularly important given the divergent markets and sectors we operate in, and the changing political landscape.
To help us manage risk effectively, we have an Enterprise Risk Management (ERM) strategy that informs all our decision-making. We refreshed it this year and reconfirmed our risk appetite. The safety and security of our people, commercial, reputational and compliance considerations are at the forefront of our strategy.
A key principle is identifying and managing the risks that may impact our ability to deliver our 2020 Vision, and those that affect operational delivery.
We also monitor emerging risks, assess trends, and establish preventative measures as appropriate. Scenario planning is playing an increasing part in our risk management approach.
The profile of risk management has been elevated amongst employees with greater clarity on the risks as well as improved reporting. We engage them in the risk management role they need to play through our induction programme and training.
The types of risk we faced this year have largely remained the same as last year, although their impact may have changed.
The main risks, including emerging trends, are:
Continuing volatility across markets
Political and economic factors create volatility. Our markets are affected in different ways. Our business strategy continues to be market and sector diversification and service differentiation by excellence, allowing us to adapt our operations to changing circumstances.
Routes to market
The size and complexity of programme opportunities has necessitated more joint ventures. These depend on mutual trust and co-operation and there is potential to create additional liabilities. These and the ability to deliver are subject to increased scrutiny and external advice is sought when necessary.
Bribery and corruption
There is more industry visibility of bribery and corruption incidents. We maintain the highest ethical standards and invest in training to make sure our employees understand what constitutes bribery and corruption, and what needs to be done to minimise the risk.
This year sanctions on countries and individuals have remained in place and at times increased, but the business continues to receive requests to work in these areas. The issues are varying, complex, time consuming and difficult to research and verify. Ultimately, Executive Board approval to proceed is required in these situations.
An emerging trend in the industry is an increased number of failures to comply with new regulation, particularly around payment notices. Our teams are regularly briefed on the changes that affect them.
Contractors / sole traders
Changes in a number of jurisdictions this year will have an impact on resourcing models, as tax authorities tighten existing legislation. The use of contractors/sole traders is a growing focus for some jurisdictions, with resourcing models potentially impacted.
Cyber security is a high profile risk in every industry and no one is immune to the potential consequences. We have reviewed and upgraded our defences where appropriate, and have sought external verification of our cyber security strategy.
Continuation low commodity prices
Natural resources has been most impacted by market conditions over the last two-three years, although commodity prices now appear to be levelling off. Strategically we have maintained a core capability globally, remained competitive, and redeployed resource into other sectors to take advantage of growth opportunities elsewhere.
Changing service offering and digitalisation
Clients’ needs are changing and our services continue to evolve as we re-engineer and develop new propositions - particularly with a digital focus - and invest in systems and tools to make us more efficient. Building Information Modelling (BIM) and intelligent portfolio management (iPM) are just two areas where we are changing our services to meet client demand. We make sure we roll out new systems and tools with thorough testing and training for employees and clients.
By far the biggest risk we face is failing to deliver a quality service to our clients.
The Executive Board are quite clear that service excellence is at the heart of everything we do and this is reflected in our commitment to the new ISO 9001 standards. In our inductions, we highlight our culture of delivering quality services, and expect our people to take individual responsibility and accountability, while supporting them with strong leadership and appropriate training.
The increasing trend for clients proposing more onerous contractual terms and/or looking to transfer more risk to their consultants continues.
As part of our ‘bid/no bid’ process, our managers are expected to consider all the risk factors involved in a programme of work. An opportunity containing significant risk must be declined.
Payment or fee recovery
Delayed payment or non-recovery is a risk, particularly where we may be a third party to a contract. Accordingly, our finance and risk management teams work with operational teams to check that contracts are signed, purchase orders are in place where required, and all parties to the contract are understood and considered ‘safe’.
Social engineering or fraud
We are seeing increasing examples of social engineering and fraud in the industry and we expect the trend to continue. Our primary defences are awareness and segregation of duties, including dual authorisation of payments.
Insurance coverage in the market provides additional protection.
Cross border trading
Tax authorities appear to be taking a more aggressive approach to cross border trading issues. Given we deliver services across multiple jurisdictions, we continue to take external compliance advice and our regional teams are briefed accordingly.
Failure to attract or retain skilled people
Talented and committed people are at the heart of our business. Capacity, skills shortages and competition within regions are a potential threat to meeting growth targets. This is mitigated by our strong global resourcing model and a strategy to attract a wider diversity of people to careers within our business.
We are a responsible business that gives people opportunities to work on iconic projects and realise their potential. Our diversity and inclusion strategy also helps to retain talent and attract a larger resource pool.
Part of our global success over the years has been based on localisation, which complements growing national legislation and client requirements.
Travel safety and security of people
Safety and security of our people is our first priority. There is an awareness that security risks increase year on year according to our growth and working in countries where do not have permanent offices. When the decision is taken to progress these opportunities, we work with our clients to assess and manage the risk.
Notwithstanding this, a number of the most recent terrorist attacks have occurred in major cities globally and we have worked with our regional managers to introduce safety measures in the workplace and developed more robust business continuity plans.