Insurers face a number of current challenges, from market volatility to major regulatory initiatives, Accenture reports in its new study, “Risk Management for an Era of Greater Uncertainty.”
According to the report, which is based on a global survey of 446 executives in a variety of industries, including insurance, 91 percent of the 98 P&C and life insurers are either currently developing or planning to develop capabilities to manage emerging risks, and many are already using innovative processes and tools to address these risks.
Insurers confirm that the integration of risk management into corporate processes (such as budgeting and forecasting, strategic planning and financing) has made significant progress over the last two years. However, the impact of risk management on operations and steering (e.g., performance management, product development, underwriting, claims and benefit management) is much weaker.
Specific approaches to developing emerging-risk capabilities vary from company to company. Accenture’s findings suggest insurers, particularly in the P&C area, face a diverse range of impediments.
Many report they are integrating the risk function as part of a “risk-adjusted operating model.” To this end, insurers report ambitious development goals for the next two years, including in risk talent and risk technology. Read more about the talent conundrum here.
Many insurance firms also appear to be working to develop the technology to embed actuarial tools into an integrated risk and finance architecture, one of the prerequisites for deep-dive analytics and the delivery of reliable, relevant information.
Accenture quotes Simon Gadd, CRO of Legal & General, life insurer and investment firm: “We have developed a central source for a lot of our risk data,” Gadd said. “There is no point in having a good model if the data going into it are not robust.”
In the report, Accenture encourages insurers to consider the following three areas:
• Manage compliance through a transformational lens—centralized management in line with business objectives that can also deliver on regulatory requirements
• Develop a risk-adjusted operating model—infuse risk-adjusted behavior into business and operational processes
• Treat risk management as a people game—explore the addition of risk specialists and strive to meet key staffing challenges through well-developed recruitment, training and retention programs
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