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New approaches to risk management in the twenty-first century - four big areas

CII Thinkpiece 104

ACE European Group President Andrew Kendrick summarises the implications of recent major research by ACE Group on the future of risk management, and four big areas to watch this year.

  • Busy management teams are struggling to keep pace with a range of new and emerging risks that pose significant threats to their business. This is the key finding from a major piece of research undertaken by ACE European Group surveying 650 risk managers and senior executives across a range of industries and based in 15 countries in Europe, the Middle East and North Africa.
  • The 'big four' emerging risks named by over 40% of executives surveyed as most likely to have a financial impact on their business over the next two years, were supply chain/infrastructure, environmental, cyber and directors' and officers' liability risks.
  • The global financial crisis has caused risk management to rise up the corporate agenda, but emerging risks have not yet been embedded in board level discussions on wider risk management issues. 57% of respondents cite lack of management attention as the biggest barrier to effective risk management, and this in turn leads to lack of human resources and risk management tools and processes to manage them.
  • Today's risk challenges demand a cross-disciplinary approach, with the risk function working closely alongside the business to identify, assess and mitigate key exposures. Compounding this complexity is that fact that risks are often interconnected: real world events do not respect neatly delineated risk categories.
  • Emerging risks create a number of obstacles to success, as they combine to create a hugely challenging environment not just for professional risk managers, but also for all senior executives. Creating the right framework for enterprise risk management, and building the knowledge and tools to track and mitigate all these risks, is hugely challenging.
  • If the insurance industry is to meet expectations of risk managers and senior executives it will need to make a shift from 'product' to a 'service' mentality, and clients will need to shift from a transactional to a strategic approach to their insurance partnerships.

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Related documents:

webpage_icon  Managing the new normal: 5 facts and 5 "do's" and "don'ts" in sustainable underwriting. CII Policy & Public Affairs. CII Thinkpiece 97. June 2013.

webpage_icon Managing the new normal: sustainable underwriting. Andrew Kendrick. Insurance Institute of London Lecture. March 2013.

webpage_icon Commercial underwriting: future skills. Richard Thornton. CII Underwriting Faculty. January 2013.

webpage_icon  Upon the door of every cottage... protecting the public in general insurance. CII Policy & Public Affairs. April 2013.

webpage_icon  Supporting strategic objectives or another compliance exercise? Understanding corporate risk culture in insurance. CII Policy & Public Affairs. CII Thinkpiece 95. May 2013.

webpage_icon  General insurance in the 21st century: meeting the challenges. Robin Spencer, CII Policy and Public Affairs. CII Thinkpiece 95. May 2013.

webpage_icon  The CII's future risk report series (6 reports). CII Policy and Public Affairs. 2013.

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