Businesses facing rapid change, emerging threats and unforeseen disruption must prioritise proactive risk management and build the right culture to support it, writes Andy Banks. Risk is unavoidable and, as the pace of change continues to quicken, managing risk is becoming a bigger challenge for all organisations. Disruption—be it geopolitical, environmental, social, or technological—is impacting societies at every-greater speed, making the risk landscape facing businesses more volatile and uncertain than ever before. It is not enough to stand still. In an increasingly unpredictable world, companies need to rethink their fundamental risk management principles to help protect and grow their business no matter what might lie ahead. So, where to start? Through our own research, we have found that four key characteristics can help to future-proof businesses facing greater risks. 1. Be forward-looking Recent events have underscored the need for organisations to be more proactive in scanning the horizon for risks, from industry regulations to systemic global disruption. A range of new threats are now emerging, and many have no precedent. As a result, we can't always use past events to tell us what comes next. Instead, organisations should consider what they learned in the past about handling major disruption and use this assessment to prepare a flexible response to future threats. 2. Be transparent and build a culture of trust The pandemic has further demonstrated that you can earn or lose trust depending on how you respond to the threats and challenges you face. Organisations should consider how they can embed a culture that supports transparency, particularly when it comes to identifying and addressing risk. This will be crucial as we all respond to major macro-challenges that require trust and transparency to forge a culture of accountability and drive positive behaviours. 3. Be resilient Many of the risks facing organisations are unavoidable. This is not just true of the COVID-19 pandemic—it is also true of other systemic issues, from supply chain disruption to cyber crises. The focus, therefore, needs to be on ensuring that your organisation can weather the storm, adapt, and emerge stronger. 4. Be inclusive The scale and interconnectedness of the risks facing organisations and society at large demands a collaborative response. This comes in many forms, from being open to new ideas, and seeking perspectives from different people, to co-operation between industries and sectors. We can't overcome systemic challenges without asking for help and working together on shared solutions. Risk journey questions Kick-start your organisation’s risk management journey by considering these 10 key questions: Is your risk management framework forward-looking and comprehensive? Does it align with your organisation's purpose and values? Is your business strategy translated into a risk strategy and risk appetite framework, as the foundation for all risk management processes? How does the risk function contribute to decision-making? How do you develop tangible data insights to model and quantify risk so that threats can be prioritised and measured using imaginative thinking? How is the organisation accountable to employees and other stakeholders? How does your organisation promote trust and transparency when it comes to equity and diversity? Is your risk appetite framework understood, implemented and used to steer the day-to-day business? How does risk management support agile and responsive decision-making? How diverse are the teams within your organisation? How does your organisation listen to different voices that can challenge entrenched habits and viewpoints? Andy Banks is Partner of Risk Assurance Services at PwC.

First mooted in 2006, automatic enrolment into a new workplace private pension scheme (auto-enrolment) looks set to be finally introduced in Ireland for private sector workers following an announcement at the end of March 2022 by Minister Heather Humphreys of plans to enrol an estimated 750,000 people in 2024. Auto-enrolment, hailed by the Minister as a “once in a generation policy”, has worked well in other countries such the UK, New Zealand and Australia. Much of the focus in Ireland to date has been on reducing future spending on pensions rather incentives to increase private pension coverage. This is not surprising given that the State Pension is the single biggest cost to the State in terms of benefits. €6 billion was spent on the State Pension in 2020, far exceeding the €4.5 billion spent on the Covid-19 Employment Wage Subsidy Scheme in the same year. It is widely recognised that Ireland urgently needs to change its culture around saving for retirement and, with changing demographics, pressure on the State to continue to fund the State Pension will only grow unless private pension coverage is increased. In 2021, the Central Statistics Office (CSO) reported that 34% of Irish workers have no pension provision other than the State Pension. Life expectancy in Ireland is currently 90 years for men and 92.6 years for women, which means that workers, on average, will be retired for more than a quarter of their lives, with one third of the population depending solely on the State to fund their later years. While the current annual State Pension of circa €13,000 might seem reasonable if you have paid off your mortgage, Ireland’s home ownership rate in 2021 was reported to be 68.7%, meaning that people many will still be paying high rents in retirement long after their peers own their own homes. With average annual rents in excess of €15,000, according to the Residential Tenancy Board’s 2021 rent index, sole reliance on the State Pension will not be sustainable. As inflation drives household running costs to new highs, it is understandable that the option of saving for retirement is the easy one to overlook. Depending on contribution levels, auto-enrolment presents an opportunity to plan more adequately for retirement. Before auto-enrolment starting a pension required a worker deciding to do so. After auto-enrolment, if the same worker does nothing, a portion of their pay will automatically go into the new workplace pension scheme, with an option to opt out. The system relies on behavioural inertia, trusting that many people will not opt out and will stay invested. This has been the experience elsewhere. A study carried out for Department of Work and Pensions in the UK looked at 50 employers across the public and private sector and identified the opt out rate at just 9%. Applying this rate to the numbers targeted for new scheme in Ireland could result in 682,500 additional private pensions for Irish workers. Expectations of final pension fund values will need to be carefully managed as starting contribution levels of 1.5% by both employer and worker are relatively low. A single person on the average industrial wage of €40,000 can expect to pay €600 into the pension scheme each year. The employer will pay the same and the State will pay €200. While auto-enrolment will inevitably increase private pension coverage, it cannot be implemented overnight. January 2024 has been identified as the starting date, but there are a lot of hurdles to overcome in advance of this date, including legislation and the establishment of a Central Processing Authority to oversee the scheme. Employers and payroll service providers will need sufficient time and guidance to ensure they can roll out the new pension system once the necessary legislation is in place. Payroll service providers have indicated that this project will take approximately 18 months once full guidance is received, meaning there will be a long lead time involved in building the system. Given Ireland’s demographics, it is important these plans are not further delayed as the pension problem is only growing. Minister Humphreys has provided assurances that the State Pension will remain the bedrock for retirees, despite much debate in recent time as to how this will be funded and at what age received. Nevertheless, to reduce the reliance on the State Pension, people need to be incentivised to start saving for their pensions while they are earning. The new auto-enrolment system, if rolled out without delay, might just be what is needed to ensure that people can enjoy their retirement. Miriam Donald, Public Policy Manager, Chartered Accountants Ireland.

This article summarises Chartered Accountants Ireland’s response in March 2022 to the Irish Government’s Consultation on the Digital Connectivity Strategy, which is a sub-strategy of the national strategy, Harnessing Digital – The Digital Ireland Framework, launched in February 2022. The Digital Connectivity Strategy is primarily focused on enabling the delivery of the digital infrastructure dimension, setting out the ambition level and the strategic enablers and initiatives needed to ensure the ambition is met. It seeks to position Ireland as a digital leader, driving and enabling digital transformation across the economy and society. The consultation asked for input from interested parties in relation to six specific questions. We responded to three of these questions, engaging with the Institute’s Technology Committee to ensure that responses are in line with the views of our members working in this area. In our introduction, while we recognise Ireland’s ranking as 5th among EU Member States in the Digital Economy and Society Index (DESI), we believe our digital plans need to be even more ambitious to promote ‘Ireland Inc’ and support our ability to attract foreign direct investment (FDI). We also note how the hybrid working model’s success will depend on the availability of reliable broadband and enhanced digital training of the workforce. The pandemic has highlighted issues in rural areas and the digital divides that exist between different groups and sectors. We need to ensure that every citizen living in Ireland has access to the internet via high-speed broadband, which will substantially increase Ireland’s standing on a global stage and bring economic benefits. Addressing the first consultation question in relation to the ambition level of the strategy, we suggest that the level be even higher and note our concern that the National Broadband Plan is already falling behind schedule. We also recognise that a shift to 6G technology will immediately be upon us when we reach the 5G 2030 goals. We suggest that this strategy is reviewed and updated every two years to ensure that it evolves quickly enough to keep pace with change. A whole of Government approach is needed and we suggest creating a separate portal on gov.ie, presenting all sub-strategies in one place, which could be used to communicate progress to stakeholders of all sub-strategies as well as the overall strategy. We welcome the strategy’s recognition of the need to facilitate and promote research and innovation in the sector, which we see as key to achieving the desired outcomes of the strategy. The second consultation we address asks how Ireland can ensure it has a sufficiently skilled workforce and the State’s role in developing this area. We recognise the talent shortage Ireland is experiencing and that a dynamic thought process is needed by the Government to ensure that people with the right skills will be available to implement its digital transformation plans. Salaries for senior cybersecurity jobs in the public sector will need to be reviewed to ensure the right calibre of candidates are attracted. Standard applications in the Critical Skills Occupation List category currently take circa 17 weeks to process; we welcome any progress that can be made in shortening processing times. The State has a leadership role to play in educating our population to support the improvement of digital skills. According to the DESI, although Ireland performs above the EU average in advanced digital skills (for example, for the indicators on ICT graduates and ICT specialists), the basic digital skills of the population are lower than the EU average (53% against 56%). It is important that Ireland continues to focus its efforts on improving the basic digital and software skills to ensure that the workforce is equipped to undertake current and future roles. We recommend that efforts are made at the primary and secondary school level to equip children and young people with the skills needed to do the jobs of the future. We welcome the €50 million funding announced in December 2021 for schools to address the digital divide, funded under the EU’s Recovery and Resilience Facility. We recognise the importance of the Science, Technology, Engineering and Mathematics (STEM) disciplines and encourage a strong focus in terms of attracting students to take on these subjects. Coding and cybersecurity should be built into school curricula. Ongoing, long-term initiatives aimed at upskilling and reskilling in higher education are also required in addition to initiatives like Springboard+, Adult Literacy for Life, and those from Science Foundation Ireland, Enterprise Ireland and Solas. There may also be scope to develop specific training programmes (similar to the Assured Skills Programme in Northern Ireland) in cybersecurity with large technology companies, which would gain from the engagement with potential employees, good publicity and the wider development of relevant skills in the workforce. The final question addressed in our consultation relates to general observations. We identify cybersecurity and data protection as key areas that require adequate resourcing. As trust is especially important for attracting FDI, we need to ensure that we continuously enhance skills in these areas and communicate our progress. We have a particular interest in sustainability and with the net zero goal for 2050 in mind, we believe that the Irish Government will need to do more than just “conduct analysis into positive and negative impacts of digital technological changes on sustainability” as stated in the strategy. All aspects of the strategy will need to be rolled out in a carbon neutral way. In our conclusion, we recognise that the Digital Connectivity Strategy is a key driver for the future of Ireland’s connectivity and competitiveness and essential for hybrid working practices. Inadequate broadband capacity will undermine the ability of regionally located businesses to compete nationally and internationally and will prevent people living in rural areas from working remotely. Improved broadband infrastructure will enable rural-based businesses to create employment in their local communities, as well as supporting the transition to sustainable and circular economies. Education and research are key; labour shortages and ever-evolving technological advances create big challenges but also opportunities for the strategy’s success. The area of cybersecurity is of particular concern, considering the developing sophistication of cyberattacks and the importance of trust for the Irish economy. We welcome all progress in the strategy’s goals and suggest continuous engagement with all parties responsible for implementation to ensure delays are identified and a path back to the plan is developed. The full response is available on our website.