Strategic risk management in insurance – Deloitte Report
Article Synopsis :
‘Strategic risk management in insurance’, by Deloitte suggests carriers face a variety of strategic risks, defined as ‘emerging threats that could undermine assumptions at the core of a company’s value proposition and foundational business model.’
Specifically, the report sees three key strategic risks emerging in insurance:
- Technology and culture shifts
- Accelerating medical breakthroughs
- New (digital native) competitors/players in insurance distribution
To cope with game-changing technologies and new competition from non-traditional sources, the authors recommend adopting Strategic Risk Management (SRM) as a holistic framework to not only help manage the downside of disruptive risks, but achieve faster growth by capitalising on the resulting opportunities. Carriers establishing SRM programs will hold an advantage over non-SRM competitors, quickly spotting evidence of potentially disruptive developments and adapting products, services, and business models more effectively to changing competitive environments.
The report presents a model framework for implementing SRM, including a deep dive in the following component areas:
- Establishing an SRM capability
- Integrating SRM into risk-sensing
- Preparing a scenario-based action plan
- Leveraging cognitive tools to enhance decisions
Though 95% of insurers have an Enterprise Risk Management (ERM) program in place, ERM is not designed to address strategic risks potentially disruptive to an insurer’s value proposition or business model. SRM is focused on conditions or events typically difficult to foresee, measure, and minimize.
Link to Full Article:: click here
Digital Insurer's CommentsMost if not all insurers invest in risk management to mobilize the company against tangible, knowable, and measurable risks that arise during the normal course of business. What happens if we hit an iceberg? SRM is about seeing potential icebergs, at night, in the fog.
SRM can be transformational. Anticipating and interpreting evolving customer needs typically requires new know-how and (digital) skills. It could mean experimentation with new business models and collaboration with new partners. It definitely means innovation and embracing a fail-fast culture – which may pose the most daunting challenge of all, as most carriers are capital-constrained and risk averse.
Link to Source:: click here