Thomas Poppensieker | Chair, Global Risk Editorial Board McKinsey & Company
“Our ninth issue of McKinsey on Risk arrives amid the greatest global crisis since the Second World War. McKinsey and the Risk Practice have been in constant conversation with healthcare, public-sector, and business leaders to help assess and meet the diverse challenges raised by the COVID-19 pandemic. As we go to press, confirmed cases are counted in the millions, deaths in the hundreds of thousands. Countries and regions struggle with the asymmetrical damage and continue to ramp up testing and treatment as the race to develop and distribute an effective vaccine takes its marathon course.
The spread of the virus led ultimately to near-universal disruption of the global economy as country after country applied preventative restrictions on movement. Then, where the infection rate appeared to fall below the danger level, restrictions were incrementally lifted. As the world’s leading companies resume full operations, they need to tackle the immediate challenges raised by the crisis and address the principal risk areas affecting performance.
McKinsey on Risk is our premier publication presenting McKinsey’s global perspective and strategic thinking on risk. In this issue, two articles describe enduring lessons that emerged directly from the struggle against the pandemic. One discusses the “minimum viable nerve center,” a leadership approach to steering effectively through a fast-moving situation impervious to familiar remedial actions. The second, showing how supply chains can recover after the crisis, explains that actions companies take to mitigate the immediate damage can also build resilience against future shocks.
Two pieces present timely considerations for financial institutions. One discussion, recognizing that banks must operate in a low-interest environment for the foreseeable future, reveals how they can reduce the pain of eroding margins through better governance and data collection. A further discussion explores the regulatory and commercial demands on banks to manage climate risk—one of the steepest challenges our societies will ever face. The authors dissect the specialized skills that banks will need to finance the green agenda while protecting the balance sheet.
The theme of nonfinancial risk is a recurring one for financial institutions. We present two important considerations here. One describes the pathway to the future state of operational-risk management—a future defined by the risk function’s close partnership with the business. A second discusses a new, highly productive and efficient way to prevent financial crime. This novel approach, which shifts the focus from regulatory compliance toward the interception of proscribed transactions, is led by a collaborative investigative team.
Further articles discuss important topics in the management of cyberrisk. One reveals how the regulatory requirements for data protection can become a source of business advantage for companies willing to offer customers greater privacy. In a final consideration, our authors explore a superior risk-based approach to cybersecurity and how it must be supported by enhanced cyberrisk reporting.
In facing both immediate and enduring risk-management challenges, our experts take a global view across business sectors and functions. The industry insights they offer reflect the hands-on experience of companies’ steering through the current crisis and transforming risk management for the future. Let us know what you think, at McKinsey_Risk@McKinsey.com and on the McKinsey Insights app.”
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