Within our industry we can look at innovation in two ways: evolution and revolution. Evolution is refining and reinventing what we currently do. Perhaps this means the change is incremental but nevertheless, we are doing something different in terms of improving our service or solutions.
By revolution, we are not just looking at changing the way we have done things traditionally, but how we respond to new and emerging risks and disrupting conventional insurance models. To what extent should we balance business-as-usual with new ideas and new products?
During the financial crisis, the insurance sector substantially managed its own risks, capital and balance sheets in a professional manner and avoided an industry crisis. However, at the same time we need to remain relevant to client needs for the future. When we look at what businesses confront today, we are challenged to find ways to provide more appropriate risk transfer solutions that expose the limitations of traditional insurance models. The use of capital markets, M&A in the insurance sector, influx of alternative capital (initially through reinsurance) technology, data and analytics will all influence the industry in addressing risk and insurance solutions in new ways.
What skills and experience does the industry need to innovate?
Risk is not just a negative. We must ask ourselves: how can we support our clients in the risks they are taking to advance their business. We must challenge ourselves and understand these risk strategies. It is not about traditional risks only, but about protecting intangible assets, intellectual property, supply chains, trading risks and other balance sheet exposures. We must demonstrate that we have the skills to understand such exposures and risk financing options.
There is a change in the nature of conversations with clients, and risk has been pushed to the top of the boardroom agenda. We need to take the mystery out of insurance and use data and analytics to address the new risk issues our clients are facing.
From your experience with clients, what qualities mark a truly professional risk manager?
I think the title “Professional Risk Manager” helps in terms of what to expect from the individual. The role needs to be relevant in providing input to executing business strategy and taking risk: new territories, new products and new technology. Companies need advice about taking and managing risk to advance with confidence. Professional Risk Managers need to engage and be relevant to this process, making appropriate recommendations aligned with the business strategy. It is not just about insurance purchase but a focus on emerging risks and how the business finances them.
For risk managers, it is not only how they work with the different parts of their own organisation but how they also engage with stakeholders externally, such as with their supply chain and customers. This role is becoming more strategic, more business-oriented, so risk managers need the skills to engage with the C-suite and participate in relevant strategic risk conversations.