We live and work in a riskier world New challenges for risk managers How adjusters can help FUEDI General Assembly 2014
We live and work in a riskier worldNew challenges for risk managers
How adjusters can help
FUEDI General Assembly 2014
Purpose
What FERMA is doing
Where we are22 member associations in 20 countries
4336 individual members who are responsible for risk management and / or insurance in their organisations
Who we are
Who am I?
So that's 2 coups, one tsunami, one major flood, one major red shirt demonstration, 2 major yellow shirt demonstrations - all in the space of 8 years
Risk management
Why do you have brakes in a car? So you can drive faster safely. Why do you have good risk management? So you can pursue your business goals more energetically - FT May 2008.
But the driver needs to know where the brakes are and how to use them - JG May 2014
It's risk management Jim but not as we've known it
A strategic business discipline that supports the achievement of the organisation's objectives by addressing the full spectrum of its risks and managing the combined impact of those risks as an interrelated risk portfolio
The first standards committee
Who Is Primarily Responsible for ERM?
Source: 2013 RIMS Enterprise Risk Management (ERM) Survey. All rights reserved.
Source: 2013 RIMS Enterprise Risk Management (ERM) Survey. All rights reserved.
Cyber attacksCyber attacks
Fiscal crisis Fiscal crisis
Unemployment &
under-employment
Unemployment &
under-employment
Income disparityIncome disparity
Extreme weather events
Extreme weather events
Water crisesWater crises
Massive data fraud / theft
incident
Massive data fraud / theft
incident
Climate changeClimate change
Failure of financial
mechanism / institution
Failure of financial
mechanism / institution
Profound political / social instabilityProfound political / social instability
Source: World Economic Forum, Global Risks 2014
And they are prioritised…
Top-rated risks – perceptions survey
Political and social
instability
Unemployment and underemployment
Imp
ac
t if
the
ris
k w
ere
to
occ
ur
Likelihood to occur over the next ten years
Economic
Environmental
Geopolitical
Societal
Technological
Critical information infrastructure breakdown
Natural catastrophes
Mismanaged urbanization
Income disparity
Data fraud/theft
Biodiversity loss / ecosystem collapse
Water crises
Climate change
Cyber attacks
Fiscal crises
Interstate conflict
Failure of financial mechanism or institution
Extreme weather events
Interconnections identified
Graphic to be replaced
Interconnections map – perceptions survey
Source: World Economic Forum, Global Risks 2014
Risk management will become risk leadership
Positionrisk management will continue to assume a higher prioritystrong board involvement advocated to facilitate strategic and enterprise-wide riskmore energy devoted to defining risk appetite, tracking, measuring and analysing risk
Challengesrisk ownership and communication at all levels links between risk management and strategic planning and management communication between the board and risk managementrisk based incentivesrisk management talent pool with the right talentrisk forecasting
There is evidence suggesting well risk managed businesses are more profitable
Principles of the resilient organisation
• Have an exceptional radar
• Value and build strong relationships internally and externally
• Leaders that are respected and respectful
• Have the ability to respond rapidly
• Diversified resources
• Top Management believe they should spend more time on strategy, talent and risk
• Risk Managers must develop business leadership skills become a business discipline add significant value or stay as fragmented technical people called upon only when
needed
15
Source: Roads to Resilience AIRMIC 2014
Challenges to achieving resilience
16
The Risk Manager•Overcoming barriers
don't over analyse
•The role is changing no hiding behind rules and regulations valued senior advisor get out and engage
•More about culture, behaviour, mind-set and insights
•Enablers and behaviours People and culture Business structure Strategy, tactics and operations Leadership and governance
Managing cyber risk is not a project
17Source: Global Information Security Survey 2012' by Ernst & Young (2013 report now also available)
How to improve cyber security
18
Source: 10 Steps to Cyber Security – UK Executive Companion' produced jointly by GCHQ, BIS and CPNI
Challenges
• Increasingly complex and rapidly changing world the pace of complexity and change will increase
• Demands for innovative solutions not products those who do not innovate are at risk
• Focus on solution design which is cover driven not the value added and what is being purchased
• Knowledge drain where are the risk leaders?
• Procurement involvement focus on price at the expense of solution and quality
What every risk manager wants
Rapid, hassle-free payment of claims
A more business like approach to claims handlingMore pre-claims discussions to clarify how the claims will be paid The can't pay, won't pay attitude to disappearFocus on creating a smooth process Insurers who listenClaims as a business not a legal issue – litigation a last resortRisk managers must take controlOpportunities for risk managers to demonstrate they do a great jobThe basics have to be rightRoles and responsibilities at times are unclear
This is what we buy in the first place
Source: Commercial Risk Europe Risk Frontiers Seminar Report 2013
Joined up thinking and action
It's too late after the eventInformation sharing should improveService levels should be defined and agreedProcesses defined and mappedProcesses communicated and embeddedTraining of those involved Communicate, communicate, communicatePlayers should be part of the renewal processDefence Response
There are more than two in this marriage
22