What used to be securely locked behind closed doors is no longer safe; now anybody with a computer and an internet connection can hack into what were once secure physical assets.
Lloyd's Register - the assurance landscape
In a recent interview, Paul Butcher addresses the changing landscape of the assurance sector and talks about how Lloyd's Register (LR) is adapting to meet the different needs of the many thousands of organisations that we serve worldwide.
You've been in the assurance sector for several years; what major changes have you seen?
‘I’ve seen a number of changes but perhaps the most significant is that we live in a world that’s connected in a way that it has never been before.
Firstly, through social media our connections are far more immediate and new thoughts and ideas can quickly get spread.
Secondly, companies dealing on a global basis are now commonplace, creating interconnected global supply chains - and all the complexities that come with that.
And then finally, we’re seeing things really changing with physical assets that are now much more connected - particularly driven by the Internet of Things.
Those three different levels of connection are really adding a complexity to the world in which we operate in terms of providing assurance services and pivotally a level of complexity to the world in which our clients operate. Bad publicity can spread like wildfire on social media, damaging a company’s reputation and in some cases destroying it overnight.
Complexities of global supplies highlight issues right back at the beginning of the supply chain, which in turn can become a problem for the retailer or the person facing the consumer; put simply, the brand damage from an issue in the supply chain can really be quite substantial.
What I think is particularly pertinent in the world in which we live at the moment is that there’s an increased awareness about the risks that live in the cyber world. As more and more assets become connected, so in turn they become a greater risk.
So those three dimensions of increased connectedness are giving our clients real challenges. By making sure that they’ve got trust in us and the right levels of assurance in place, then we can help to keep their risks under control.’
Have the buyers of assurance changed and if so why?
‘Historically buyers of assurance services have typically been in the quality management part of an organisation and that’s certainly where LR built a lot of its history, heritage and trust; we’ve had - and continue to have - some great relationships with many clients in this arena.
In some cases, customer relationships date back over thirty years and we’re very proud of the long associations we’ve had with organisations, helping them to manage their quality issues. But in recent years, we’ve seen a real change as their quality agenda has shifted more towards the management of risk.
Organisations have started to look at how they can use standards and assurance services to help them better manage risks in their business. As a result of that, we’ve seen conversations start to move onto the boardroom agenda and senior management starting to take an interest in how the services that we offer can help them.
There is a desire for organisations to lift the bar, and do more than meet the requirements of a standard or scheme; they want to enhance it relative to their own requirements.
Consequently, one of the areas where we’ve been really focused on is helping our clients to build their own customised programmes by expanding the existing standard or scheme to address the risk aspects and not just the compliance aspects. At LR, customised assurance is an extremely important part of our business because it is important to our clients in terms of adding additional value and greater levels of assurance.’
How important is trust to you in relation to the services that we deliver?
‘I think trust is crucial for any organisation operating in the 21st century. The world in which we live and operate in has changed dramatically. The increase in social media means that when a company has an issue, it spreads much more quickly through their supply chains and customer base alike. Organisations need to be able to deal with and manage that.
There are lots of examples of organisations who have failed to address issues that go to the heart of trust and it’s damaged their brands. If we think back a few years ago in the UK we had issues with horsemeat entering the food supply chain; it was front page news for weeks, damaging the reputation of many of the food retailers in the UK meaning that they literally lost customers because of this incident.
At LR, we recognise that trust is the crucial business commodity of the 21st century.
Our job at LR is to help our clients create trust with their clients which we do by providing assurance and confidence about what’s going on within their supply chain.
But actually, it’s also crucial for us at LR that our clients trust us, they’re relying on us to give them the assurance that they need for their business, processes and supply chains. Therefore, they need to have confidence that we’ve got the technical expertise, that we will provide the independent view and voice that will understand the risks that they’re facing and help to manage them.
For LR, creating trust is crucial and we do that by having the technical skills and competence in the business.
Of equal importance is the ability to listen to our clients, understand their needs and build flexible solutions to meet their requirements.
The reality is that the world is changing fast and our clients are having to respond to that; as an organisation and a partner, we need to be able to change with our clients, adapt our services to meet their needs to help ensure their success and in doing so help ensure our own success.’
The market talks a lot about technology centric assurance services; what does this cover and is it real?
‘There’s no doubt that technology is changing the world of assurance services; it is certainly changing our own lives and it’s no different for us at LR or for our clients.
I think the interesting opportunity that technology brings that’s most relevant to us is in the area of data and insights. We live in a world where there is more data than there’s ever existed before - in fact many organisations are drowning in a sea of data. The real challenge for organisations is to actually bring insight to that data, to understand what is going on in their business or in their supply chain.
An area where LR brings added value to clients is our combination of insight and understanding to give a clear real-time view of what’s going on.
You know, many of the people who work for us at LR are experts in their domains and can take what looks like ‘ones and zeros and bits of data’ and turn it into real information and insight. It’s that ability that gives our clients actionable plans that they can trust to go and put in place, which in turn are going to help them to better manage the risks in their organisation.’
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