In the dynamic period ahead for North American insurers, the risk function can be an even more powerful tool for senior management. In the Accenture 2015 Risk Management Study, North American Insurance Report, we examine how risk management is poised to offer the C-suite far more value beyond insight on minimizing risk.
Insurers face many powerful challenges, including greater competition, legacy IT systems, a difficult investment environment and expected additional regulation. Still, carriers’ risk appetites are growing, with many already determining which growth opportunities merit resources.
Many insurers have already laid the foundation for value-centric risk functions that can shoulder more than their traditional remits. In our North American study, very capably led by my colleague Duncan Barnard in Boston, 88 percent of insurers reported that their Chief Risk Officers (CROs) are key or among the decision makers in strategic planning, and 86 percent reported a similar role for CROs in planning business-model changes.
But as CROs strive to reposition risk management as a function that enables, rather than impedes, growth strategies, many insurers have resisted this partnership. For example, the majority of the Accenture study’s respondents reported that the connection between risk and finance could improve. Just 22 percent said their interaction with the chief financial officer (CFO) is very frequent, compared to 32 percent elsewhere in the world.
We believe CROs have an opportunity to continue positioning their functions as strategic advisors and supporters of key decisions across the business, such as mergers and acquisitions, product strategy and new distribution channels.
In this five-part series, I’ll examine the benefits that senior management can draw from value-centric risk functions. In my next post, I’ll look at how CROs can provide critical input in shaping digital initiatives—which too few insurers are addressing during the small window of time they have to head off new competitors.
Insurer CROs are in a unique position to demonstrate that the risk function can be a valuable partner to senior managers as they strategize about growth initiatives. The risk function can be an enabler of these strategies, not just the department that establishes controls limiting them.