“It is now important to take time to reposition ourselves, and to be less regulation driven and more focused on business.” When it comes to risk management initiatives, this quote from a survey respondent summarizes the vast majority of insurers’ sentiments around using these initiatives to achieve broader business goals. Yet, results from our 2013 Global Risk Management Study reveal that insurers are still challenged in attaining this higher goal as their efforts to comply with regulatory packages is mostly a work in progress.
Let’s look at how insurers measure up.
Charting compliance progress
According to the insurers Accenture surveyed:
- Only 25 percent of life and 6 percent of property & casualty (P&C) insurers report they are “on track and confident” of meeting compliance deadlines.
- One of the top focus areas for insurers to achieve Solvency II compliance is defining and implementing an adequate IT architecture.
- With regard to risk governance, the only area surveyed where more than 20 percent of insurance respondents say they are completely ready to comply with regulatory targets is data availability and quality.
- Insurers are generally less ready for compliance with regulatory targets in the area of risk modeling and quantitative capabilities than for compliance with targets on risk governance issues.
Benefits beyond compliance
While it’s clear that much work remains to be done in complying with regulations, some insurers are already considering how to turn newly developed capabilities to the benefit of the broader business. Here’s how:
- The majority of companies surveyed expect to see improvements in internal reporting capabilities, communication with the public and risk-adjusted performance management.
- Fully 80 percent of insurance respondents now require the risk management owner to report regularly to the board.
Risk-adjusted operating models are top of mind
So, what’s next for insurers? One of their key goals is developing a risk-adjusted operating model, which gives the risk function increasing input into everything from strategy to capital optimization.
As our survey findings show, the risk function is most integrated with the core insurance functions of underwriting, corporate strategy and risk financing.
Overall, there appears to be a strong trend toward greater integration within the organization. Next week I’ll share the risk capability goals of insurers looking ahead to 2015.
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