Anticipation of risk is no longer an adequate strategy for organizations trying to manage it, especially in today’s environment. Such were the comments made yesterday by Joe Plumeri, chairman and CEO of Willis Group, in his keynote address at the World Captive Forum in Miami.
Plumeri told the audience that organizations also need to focus on building resilience to effectively manage risk and position themselves for long-term sustainability. Further, the hallmarks of a resilient organization include acknowledging the difficulty of predicting the future or so called “black swan” events. Instead, organizations need to operate in a dynamic fashion to make adjustments in real-time when a catastrophe strikes, while simultaneously preparing for the future, he said. “In order for companies to build resilience, they need to ask themselves, ‘will we be here in 10 years? will we be here in 50 years?’”
Plumeri reminded the audience that Miami, the site of the 2012 World Captive Forum, was also the site of the costliest disaster in U.S. history. In 1926, the great Miami hurricane caused severe human loss and steep economic losses which totals $169 billion when adjusted for 2010 inflation, according to data released by the National Oceananic and Atmospheric Administration. The hurricane virtually wiped out the city of Miami, largely due to a flawed response, Plumeri said. Citing a prominent catastrophe modeler’s estimation of $101 billion in insured losses for a similar event today, Plumeri noted that an event of this scale would have the potential to draw down a significant portion of the global insurance capacity.
“Traditional property/casualty risks endure, but the nature of risk is changing,” Plumeri said. The top five risks on the minds of business leaders today are not easily solved by purchasing insurance, Plumeri noted, citing examples such as loss of customers, regulatory investigations and reputational risk. Meanwhile the global marketplace continues to drive other risks including political, supply chain, cyber and balance sheet risk, he told attendees.
“As the risk landscape evolves and includes both natural and man-made catastrophes, organizations need to build resilience against the unpredictable. Insurance serves as a powerful ally for organizations to tackle these new risks and in many ways, insurance is the bridge between anticipation and resilience,” he said.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access