All insurers surveyed in the Accenture 2015 Risk Management Study are looking to derive competitive advantage from their investment in operational risk and regulatory compliance. They wish to leverage these capabilities and technologies in order to enhance the overall performance of the business, reduce its costs and generate greater value.
Focusing on the priorities I spoke about in my previous blog post can help insurers to achieve their goals. To generate favorable results, Accenture encourages insurers to develop core capabilities and competencies across three broad areas:
- Strategic decision-making: Making better-informed business decisions, notably through an enhanced perspective on risk/return trade-offs.
- Process efficiency: Streamlining processes and tools to enhance operational efficiency and free up sufficient time for risk resources to focus on more valuable activities.
- Operational risk: Turning operational risk into a competitive advantage. This means selectively investing in the operational risks that are worth taking in the pursuit of strategic objectives, and developing the operational agility that can enable broader business benefits to be gained from regulatory compliance activities.
Risk management must also push ahead with forging closer ties with the rest of the business in order to cement the function’s position as a business partner. Accenture’s work with insurers across the globe suggests the need for a “risk-adjusted operating model”. This enables the risk function to encourage value creation by supporting the business in optimizing its generation and use of capital while minimizing operating, financial and regulatory threats.
I was pleased to see our research indicates that insurers have already embarked on a journey to reposition the risk management function within their business. In addition to meeting their traditional obligations, chief risk officers and their teams are increasingly serving as enablers of innovation and growth.
They are stepping up to the industry’s urgent need to seek out new sources of revenue and accelerate innovation. These remain challenging times for chief risk officers in the insurance industry but, with the right ambition and the right resources, they will complete their transition to a role that considers both risk and return in equal measure.