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Changing risk management for the changing global environment

Corporate Risk Consulting|Riskhanteringsverktyg & -teknologi|Doradztwo ubezpieczeniowe i technologie
Insurer Solutions|Geopolitical Risk

By Kirsty Leece and Jennifer Smith | April 2, 2019

The strategic CRO needs to be at the forefront of understanding a rapidly changing environment to assess risks in an informed way and advocate for new opportunities. 

People are adapting to the increasingly complex environment around them. We’re living longer than ever, in an environment of constant change. Technology is affecting how we work and communicate, making anticipating the future more complicated than ever. The strategic chief risk officer (CRO) is an expert in the field of risk management.

This article outlines six of the key global trends that are impacting the work of risk management teams.

1. People

Diseases that have been treated have been eradicated and many of those have been treated or prevented. People are more educated on health issues, and technology is pushing the boundaries of medicine.

On the other hand, people are living longer, and with this increase in other diseases related to old age. There are many long-term care needs and a social and fiscal structure that are often not prepared for. This poses a challenge for the life insurance industry, which is finding it difficult to develop financially viable products for an older, but less healthy population.

Changes in wealth between generations are also leading to a change in customer base for traditional insurance products. These changing needs bring the issue to life.

2. Places

There are more environmental factors to consider, such as rising temperatures, heatwaves, hurricanes, wildfires and floods. These events have wider consequences than just the people they impact. They can also impact the economy by deteriorating the value of assets. It is also possible to use this method to protect the environment and to reduce the price of petroleum, to just two.

Understanding both the effects of these high-impact and low-level events and the potential impact of this approach can also have an indirect impact on the company. Risk teams need to have a better understanding and ability to monitor the horizon, and to assess and quantify the impact of such events and related management actions. As climate events become more important, the cost of not having these core skills increases.

3. Technology

It is expected that our lives will be digitalized, which presents opportunities for insurers that can better understand and meet their needs.

This additional privacy, cyber and ethical risks. The quality of any data must be considered for inaccuracies or inappropriateness. Risk teams must consider moral, ethical and legal implications of data use, as well as the evolution of risks.

4. Behavior and expectations

There are also cultural shifts in people’s behavior. They are expecting more from the products that they purchase, and to increase their levels of consumer connectivity, they are more likely to have their frustrations to a wider platform if they experience a dissatisfactory service, which means that these reputations and trust can be dealt with easily.

However, the technology can be used to improve the risk of failure. This paper is about social media monitoring, how to monitor social media channels, and what is published.

The role of insurance companies in the life and health of the elderly and the elderly. With this comes a potential increase in conduct and reputational risks. The strategic CRO needs to be fully engaged with customer needs and the increasing level of data and information provided to deliver this service.

5. Complexity

The world is more connected and complex than ever, and this poses a challenge for risk teams. When understanding the impact and interaction of these exposures, risk teams need the appropriate modeling capabilities and stress and scenario testing to understand the full impact of a risk event.

6. Changing risk teams

In this series we have highlighted the need for the CRO to be a part of decision making. The changing environment has a need for the CRO and the ability to understand and understand the risks of change. These changes will be measured and monitored, to be changed and underpinned by the management of risks by the business.

Conclusion

Having a framework and tools that are ready to respond to agility and resilience This method may be used in the context of an expert’s opinion on the subject, and may be considered to be of limited value or may not be sufficient. The key to a successful risk is prepared for every event, but to be prepared for any eventuality.

About the authors

Kirsty Leece
Director, Insurance Consulting and Technology

Jennifer Smith
Senior Consultant, Insurance and Technology Consulting (ICT) 

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