Monthly Archives: September 2015
What are Most Challenging Emerging Risks for the Insurance Industry to Cover for their Commercial Clients?
Paolo Ribotta, Head of Global Corporate & Commercial, Generali Group, considers the question: what are most challenging emerging risks for the insurance industry to cover for their commercial clients?
Let’s set the stage. There are some mega trends that clearly will have an impact. On one hand, we have, of course, technology. On the other, the world today is highly interconnected, and so are the risks from water crises and interstate conflicts to fiscal crises, cyberattacks, social instability, extreme weather and pandemics.
Cyber is by far the number one emerging threat, but a lot has been said about it, so I would like focus on other issues.
Within this context, I see some of the most important emerging risks coming from the following three elements:
1. Business continuity and reputation;
2. The evolution of the business models of our customers and
3. An overall shift (especially in Europe) from production and manufacturing to intellectual capital and services.
I see reputation as more and more one of the key risks and challenges, and, actually, opportunities for a client.
For example, if we look at how our clients have developed their geographical presence, we can see how new risks related to this expansion have emerged and are becoming more important.
Expansion into new countries with natural catastrophe risks or related social conditions could and will drive more reputation and business continuity issues. If you think about everything we have seen in recent years in terms of social unrest or critical social factors, clearly these could have an impact on the business continuity and /or reputation of clients.
Another element that plays towards the reputation challenge is the digital space and communication channels, such as social networks. What happens in a given place is immediately known everywhere in the world, within the blink of an eye. Even more importantly, within these technologies and channels there is less and less the ability for the users of this information to distinguish between true and false. Corporate and commercial clients can have their reputation exposed in any single moment either for good or for ill.
One of the emerging risks of the insurance industry is in connection with the evolution of the business model of our customers and how this is already changing some of their risk priorities. Such development pressures us, insurance companies, to act immediately and wisely to improve dramatically our ability to listen to clients, understand their needs and especially know how we can play a role in their own business models.
For an increasingly number of corporations, the key success factor is the customer experience and the value proposition that they are bringing to their clients.
Now we see that what makes the difference between one successful corporation and another is not only the quality of the goods that they manufacture and sell but, as I was saying before, the customer experience and how well these corporations manage their clients’ lifecycle.
I believe that the ability to evolve in their business model so that companies defeat their competition without compromising on margins is the critical aspect. In connection with this, our key challenge is really to remain relevant as insurers, not just as a contingent capital providers but even more so as a service providers, ensuring that our value proposition helps corporations to deliver their fully fledged customer experience and promise.
Another aspect, which is a subset of the above, relates to the shift we have been seeing for some years from production and manufacturing to intellectual capital and services. This shift creates an approach that goes much more towards what we traditionally look at as liabilities instead of traditional protection of assets.
Let’s take for example driverless vehicles and sharing economy companies. These are creating a disruption in the way insurance companies and clients are looking at the traditional motor cover, so there again we will have a shift in the liabilities.
Another example is domotics. Home is no longer just four walls with furniture inside where you can have a water leak or a fire. All of a sudden, it becomes a complex system where many devices are interacting. The interaction among them, and their potential failure to provide the service they were intended for, will create needs or exposures that today we may not think about. You can expand these examples across the corporate segment.
For insurers, I strongly believe that technology and big data play a huge role empowering us ever more with insights to support clients’ business in upgrading and improving their value proposition. One on hand, therefore, it is essential for us to invest heavily in data analytics. On the other hand, and even more importantly, it is fundamental for us to invest in creating the skills to transform data into insights and knowledge to drive decision making.
Madrid, September 16, 2015. The Spanish Association of Risk Management and Insurance (AGERS), has presented the First Manual of International Insurance Programmes in English. More than a hundred professionals have attended.
The event, which took place in Madrid, was directed by Mr. Juan Carlos López Porcel, President of AGERS and Risk Manager Arcelormittal España, and Mr. Álvaro Mengotti, AIG General Manager Iberia.
At the end of the presentation, in the middle of an active networking, having a breakfast, participants have received a copy of the manual. For this English edition, AGERS has enjoyed the cooperation of AIG Spain and FERMA.
The Federation of European Risk Management Associations (FERMA) has announced its 2015-2016 executive committee ahead of the 2015 FERMA Risk Management Forum and the start of the term of its new President, Jo Willaert. Three new vice presidents will join the executive committee together with Gilbert Canameras from the French association AMRAE who has become FERMA’s Secretary General. Continue reading
Within our industry we can look at innovation in two ways: evolution and revolution. Evolution is refining and reinventing what we currently do. Perhaps this means the change is incremental but nevertheless, we are doing something different in terms of improving our service or solutions.
By revolution, we are not just looking at changing the way we have done things traditionally, but how we respond to new and emerging risks and disrupting conventional insurance models. To what extent should we balance business-as-usual with new ideas and new products?
During the financial crisis, the insurance sector substantially managed its own risks, capital and balance sheets in a professional manner and avoided an industry crisis. However, at the same time we need to remain relevant to client needs for the future. When we look at what businesses confront today, we are challenged to find ways to provide more appropriate risk transfer solutions that expose the limitations of traditional insurance models. The use of capital markets, M&A in the insurance sector, influx of alternative capital (initially through reinsurance) technology, data and analytics will all influence the industry in addressing risk and insurance solutions in new ways.
What skills and experience does the industry need to innovate?
Risk is not just a negative. We must ask ourselves: how can we support our clients in the risks they are taking to advance their business. We must challenge ourselves and understand these risk strategies. It is not about traditional risks only, but about protecting intangible assets, intellectual property, supply chains, trading risks and other balance sheet exposures. We must demonstrate that we have the skills to understand such exposures and risk financing options.
There is a change in the nature of conversations with clients, and risk has been pushed to the top of the boardroom agenda. We need to take the mystery out of insurance and use data and analytics to address the new risk issues our clients are facing.
From your experience with clients, what qualities mark a truly professional risk manager?
I think the title “Professional Risk Manager” helps in terms of what to expect from the individual. The role needs to be relevant in providing input to executing business strategy and taking risk: new territories, new products and new technology. Companies need advice about taking and managing risk to advance with confidence. Professional Risk Managers need to engage and be relevant to this process, making appropriate recommendations aligned with the business strategy. It is not just about insurance purchase but a focus on emerging risks and how the business finances them.
For risk managers, it is not only how they work with the different parts of their own organisation but how they also engage with stakeholders externally, such as with their supply chain and customers. This role is becoming more strategic, more business-oriented, so risk managers need the skills to engage with the C-suite and participate in relevant strategic risk conversations.
Insurance – and risk – is a great career for women, although not just for women, insists Anne Charon, CEO of the Zurich Insurance Group (Zurich) entity in France.
Anne has three children aged 15 to 21, and she says that she regularly reminds them that insurance is a great industry to work. “It has lots of opportunities and lots of career development possibilities. You see many different industries. You can work in underwriting, claims, finance, HR or marketing. You take care of the customer and they all have different needs and strategies making it very interesting to speak to them. No two days are the same.”
Risk management, she says, can bring out the nurturing side of women, although again this is not a quality unique to women. “Increasingly women have access to this role and it is about protecting and conserving the people and the assets of that organisation, so it is a little like looking after a family. That makes it a very good role for women.”
Why is Zurich sponsoring the ladies’ lunch at the FERMA Forum 2015?
“It is quite a tradition that we do something for ladies. On the previous occasions, we’ve had lots of discussion about how to mentor and help the next generation have access to key roles. We’ve shared lots of practical advice. This year we also organised an event for ladies in risk at RIMS. We had a lunch where we shared experiences and heard from an excellent speaker who had access to key roles. In Zurich we try to promote all of this work at all levels. We have women’s internal networks in 15 countries.”
Why is networking the topic for discussion at the ladies’ lunch?
“This is a great topic because networking is essential if you are going to promote diversity. The network becomes a team where you find help, gain confidence and share ideas. Good mentoring is really the key (and I have mentored quite a few ladies myself), but helping each other and sharing knowledge through a network is a very robust foundation from which to move and to grow.
“Women network in a different way from men, I think. We don’t necessarily have the same confidence or sense of ‘brotherhood’ but then women will share things that perhaps men would not. I think we discuss a broader mix of topics. We pay attention to the younger women and to the less strong members. We look at soft skills. Men are more straightforward in what they are looking to get.”
Anne has created a network for female customers in France as she sees more women with access to the risk management and insurance buying roles. “Our Ladies’ Customers Advisory Board is a great forum where our female customers enjoy meeting each other and sharing practices. It is very popular. We have one or two events a year for this group and they are the best attended events. There are no ‘no-shows’! Zurich also has a network for women customers in Spain and we hope to bring them together for a joint event next year, along with other European countries.”
Interview with Julia Graham, Forum Programme Committee member and President of SIRM
- What will Risk Managers gain from the Forum?
- How do you see the Forum influencing the Risk Management in Europe?
Diversity is a key theme of the FERMA Forum 2015, and Giles Ward, Regional President for Eurasia and Africa at ACE, explains why diversity matters to business. ACE is the sponsor of the diversity and leadership breakfast on 7 October at the Forum.
Diversity of thought is the most important aspect of diversity, Without it, businesses will be unable to adapt effectively to changes in the marketplace brought about by cultural, technological or other socio-economic trends. This is why being aware of where you hire your talent, and ensuring that you have access to the widest possible range of talent, is important. It is difficult to have diversity of thought without diversity of experience.
How diverse is the insurance sector?
From my experience, I think the insurance world has made good progress in this regard over the years. However, I also think there is more that we could do to encourage a wider range of talent to join, and stay in, the industry. The circumstances are particular to geographies and sectors. To give an example, according to the UK National Careers Service, both the actuarial and management accounting professions are 60% male and 40% female. So, for an insurer seeking to recruit those skills, the talent pool is skewed from the outset. But it is not just external factors: it is also undeniable that vestiges of the ‘boys club’ that the industry used to be are still present in some markets.
What, in your opinion, can be done about this?
I think firms should be looking very hard at those things that act as ‘blockers’ to bright people progressing in our business. This means both a focus on culture – in particular that the way we go about making decisions encourages people to air their views in a positive atmosphere and generate ‘different thinking’ – and on the practical issues, such as enabling flexible working patterns. We also need to think about what data we need to track progress.
I also think is extremely important that we attract and facilitate the widest possible range of talent to join our industry. To the extent that this is inhibited by things like working practices that discourage particular sections of society, tacit acceptance of discriminatory behaviour or the failure of the industry to communicate and engage with as broad a range of people as possible, these things need to be addressed.
How do you feel about the future?
Although there is still much to do, my view is that the industry has made significant strides – certainly since I joined it nearly 30 years ago – in addressing the gender gap in particular, and that we will continue to see progress in over the next few years. I hope that, a generation from now, people will wonder why this ever was an issue. There are still challenges, though. To give an example, how do we as an international organisation tackle issues such as discrimination on the basis of sexuality in countries where homosexuality is illegal? Or deal with staff issues where religious differences can be the cause of real conflict?