What’s the difference between success and failure for a carrier? Overwhelmingly, it’s the ability to manage risk effectively. It’s a subtle thing in an industry where insurers deliberately assume risks through underwriting, and must manage asset allocation to ensure that all claims are adequately funded at any time. Clearly, an insurer must be able to model risk in a very sophisticated way.
Integrate risk management into core strategy
New regulations are changing the way that risk is managed, and increasingly, requiring carriers to integrate risk management into core business strategy. Beyond mere compliance with these regulations, embedding risk management into the business can improve cash flow, reduce earnings volatility and reduce the cost of capital.
Specifically, integrated risk management can:
- Provide a clear, holistic view of risk across the company.
- Improve operational efficiency.
- Improve relationships with ratings and regulatory agencies.
Aligning risk management and strategy
Accenture’s approach to risk management focuses on three core areas:
- Formulate a strategy. Carriers must include people, process and technology in creating a strategy for risk management.
- Manage strategic risk. Use tools and insights to identify strategic risks for a particular industry and strategy.
- Evolve business strategy. Move beyond measuring and protecting existing strategy; evaluate new options using tools, metrics and models.
For more information, download Accenture Risk & Regulatory Solutions: Risk Management for the Insurance Industry. How do you embed risk management into your business?