Getting risk management to keep pace with the rise of digital and competitive challenges in the insurance industry requires a focus on a number of key priorities, according to the Accenture 2015 Risk Management Study. Here are the imperatives that the insurance respondents identified.
Getting to grips with digital: Insurers agree that digital initiatives represent an opportunity for risk management to shine as a business partner. For now, though, the level of digital expertise within the risk function is not particularly high – and this could hamper its ability to influence broader strategic thinking on the topic.
Strengthening data and analytics capabilities: Getting access to more and better data will be a key factor in enhancing operational risk management. This remains an area of weakness for many insurers surveyed – some parts of the business may now be embracing analytics, but the risk function has been slower to do so.
Delivering on the next wave of business growth: Operational risk can be an effective tool to define, develop and protect new capabilities required in the search for growth. It can be especially helpful in delivering business advantages through adapting tools and controls for digital transformation.
Concentrating operational risk resources on these emerging business areas makes sense, because more established lines already have built-in risk mitigation from the longstanding experience, relationships and processes that are in place.
Ramping up recruitment and retention efforts: Many insurance respondents are struggling to keep pace with the demand for highly specialized skills and knowledge in the risk function. Just 7 percent of insurance respondents say that their teams have sufficient internal resources in specialized areas, such as modeling or emerging risks, although 21 percent hope to be in better shape in two years’ time. Many insurers have worked hard to increase the range and depth of skills and capabilities in the risk function – and will continue to do so.
Creating a consistent risk culture capable of withstanding disruptive change: Respondents are struggling to implement an enterprise-wide risk culture. Just 7 percent of surveyed insurers say they have a strong and consistent risk culture that is understood and implemented across the entire organization, although 23 percent believe they could achieve this over the next two years.
The goal for insurers should be a culture in which everyone – not just those in the risk function – makes decisions and choices based on an assessment of both risk and return over the long term. For some, this may mean rethinking the organizational model to embed risk management within the business.
In my final post, I’ll consider some ways insurance risk officers at can respond to their emerging challenges and opportunities.