Moving the needle from theory to practice was at the heart of AIAG’s 2016 Corporate Responsibility Summit, held April 27-28, 2016, at the Suburban Collection Showplace in Novi, Michigan. Speakers addressed a variety of CR topics, providing the latest information to help participants build a business case for sustainability.
In this fourth of a five-part article series, here are some highlights from an OEM panel discussion on managing risk.
How Are You Leading in the Face of Risk?
On day two, members of an OEM panel responded to the question: How are you leading in the face of risk? Participants included William Hall, director — sustainability and business continuity at FCA US LLC; David J. Tulauskas, director of sustainability at General Motors Company; John J. Viera, director, sustainability & environmental policy at Ford Motor Company; Jim Holloway, general manager, supplier relations at Toyota Motor Engineering & Manufacturing North America, Inc.; and Eric Walli, manager, regional planning, at Honda North America, Inc.
The panelists agreed that a good working definition of risk is any source of uncertainty. However, they were quick to point out that if a company does not take risks in the business world, it cannot make money. “You have to look at the connection between risk management and value creation,” Hall said. “You have to take chances but reduce your risk profile. That’s how you create value. Risk management is a way to thrive — not run in fear.”
“Uncertainty is scary and people want to avoid it,” agreed Viera. “Some elements of risk are negative, but it can be positive. You can get into a competitive leadership situation by taking on that uncertainty. Risk is an opportunity to improve the business you have.”
Tulauskas described risk as “anything that can change your game plan,” adding that managing risk applies to everyone in every job — “not just the people who have it in their job title.”
“You need risk if you’re going to change your product line and have breakthroughs,” added Walli.
That being said, the OEMs pointed out that risks that present themselves in a crisis are different than calculated risks. To handle crisis-based risk, companies need a robust risk management system. “A risk management system is needed to help the company adjust to a changing environment,” said Holloway. “This kind of risk management has to be a corporate initiative.”
Tulauskas pointed out that if everyone is responsible for risk, sometimes no one owns it. “That’s why you need a robust process and need to bring cross-functional teams together to talk about it. The process drives discipline,” he added.
Hall emphasized that because there are different types of supply chain risk, no one particular risk management system can handle everything. Business continuity management is an example of a specialized approach to each kind of risk.
Wrapping up the discussion, the OEMs underscored the need for a positive approach to risk. “Risk is good. You can’t operate without it,” said Tulauskas. “Be proactive. Get out in front of the issues; build your corporate reputation.”
Walli added that a company’s reputation is built by understanding, certifying, monitoring, and analyzing its suppliers. “What’s critical to your company? What’s the target and what set of suppliers are strategically linked to that initiative? Identify those suppliers and take on risk as a team. You need your finger on the global pulse. Piece together the newest information, and judge what you think is important for your business.”
“Engage more eyes and ears to find where those problems might be lurking,” added Viera. “Collaborate with other groups, stakeholders, and NGOs. You must ask: How can we approach this together to mitigate risk?”
The OEM panel concluded with a call-to-action for attendees to participate in AIAG’s Corporate Responsibility Workgroup. “We’ve got to be big and bold to change people’s perception about our industry so that we can attract great talent moving forward,” said Tulauskas. “We need our automotive presidents and CEOs standing with country leaders on these issues. We have to solve the big issues and build better communities. We have success stories, but we don't talk about it enough.”
“We’ve got to create an inspiring vision so that we can bring the best thinkers back from Apple, Google, and Amazon,” concluded Hall. “For example, the auto industry could take an active leadership role on human rights. How can we build the collaborations and take action?”
AIAG members can access all the presentations from this year’s Corporate Responsibility Summit online at www.aiag.org.
Carla Kalogeridis is AIAG’s e-news editor.