The Federation of European Risk Management Associations (FERMA) has urged the Swedish Presidency of the Council of the European Union to focus on closing the cyber and sustainability insurance protection gap, while continuing to call upon the insurance industry to provide more coverage to support the digital and green transitions.
In its paper, “Contribution to the Swedish Presidency agenda – Strengthening competitiveness at EU level”, FERMA highlights the criticality of effective risk leadership in supporting the ambitions of the Swedish Presidency to strengthen the competitiveness of Europe.
The Swedish Presidency, which began on 1 January and continues until 30 June, occurs at a time when the EU is addressing the multiple challenges of inflation, an energy crisis and war, coupled with the impacts of the green and digital transitions. FERMA believes the key issues risk managers must address in this context to boost competitiveness are:
- Cyber threats
- Increasing influence of ESG considerations on policy
- Geopolitical uncertainty
- Non-resilient supply chains
Addressing the digital transition, FERMA believes that the ability of companies to assert their technological innovation will be crucial to Europe’s competitiveness, with risk managers playing a central role in helping organisations manage mounting cyber risks.
However, in response to the growing threat of cyber risks becoming ‘uninsurable’, the paper adds: “It is FERMA’s view that the cyber insurance protection gap – namely the mismatch between the increasing demand for, and lack of supply of cyber insurance – should be on policymakers’ radars, especially during the Swedish Presidency.”
In its proposals to policymakers on cybersecurity, FERMA urges them to: “Foster a holistic risk management approach to cyber resilience by building on the strong cybersecurity-by-design principle of the Cyber Resilience Act and complementing it with an overall approach to cyber resilience.”
FERMA recently launched a Cyber Insurance Project to analyse current cyber challenges and provide solutions to strengthen digital competitiveness. FERMA is also working on Project LUCY which will examine cyber insurance at the European level.
The paper also focuses on sustainability and the green transition, with FERMA outlining the near-term ‘growing pains’ this will create. It believes key areas for risk managers that should be a priority for the Swedish Presidency are:
- Value chain due diligence
- The insurance protection gap
- Critical raw materials and supply/value chain issues
FERMA is clear on the insurance industry’s key role in supporting the green transition, stating: “Encouraging companies to innovate and invest in greener and more sustainable products is a way to advance the climate agenda. But financing this adaptation is key; risk managers call for increased support from insurers who have shown to be risk averse in the context of the green transition. Corporate insurance buyers require more insurance coverage for the risks required to innovate.”
FERMA is currently contributing to a multi-stakeholder group launched by the European Commission to offer its risk-based insights and solutions on protection gaps and the green transition.
Commenting on the paper, Dirk Wegener, President of FERMA, said: “Enterprise risk management is the bedrock, it enables companies to remain resilient and in business. Risk leadership is our compass to achieving what we want for our greener and more digital planet.”
Valentina Paduano, Chair of FERMA’s Sustainability Committee, added: “The role of risk managers is to support top management in highlighting sustainability topics at strategic levels. It is also to have an enterprise-wide perspective to address these emerging new topics through consolidated processes and strategic discussions.”