Is risk management ready to take centre-stage?

Effective risk management has created a valuable, if somewhat ambiguous, opportunity for re/insurers, which has become more evident under the glare of attention prompted by COVID-19 and broader global disruption.

Climate change, political upheaval, and digital disruption, all delivered simultaneously with the consequences of the pandemic, may provide an opening for effective risk management and the repurposing of responsibility to enhance reputation.

Even though corporate reputation is more vulnerable now than ever before, experts believe that risk management should become an integral part of an organisation’s leadership strategy.

The global re/insurance industry has a valuable opportunity to place risk management at the centre of organisational strategy to ensure a more fruitful long-term reputation.

That was one of the main points from a panel discussion titled “Risk management: is it time to reset re/insurers’ corporate responsibilities?”. The discussion took place on Intelligent Insurer’s Re/insurance Lounge, an online platform where interviews and panel discussions are available on demand.

The event featured Penni Nelson, RIMS board director and assistant vice president, risk management at Hillwood, a Perot Company; Julia Graham, deputy CEO and technical director at Airmic; and Howard Kunreuther, co-director, Risk Management and Decision Processes Centre at the Wharton School, University of Pennsylvania.

“It is time for risk management to come to the party with company leadership and corporate communications.”
Julia Graham, Airmic

Nelson said that even though many organisations are battling reputational risks that will have an immense impact on long-term profitability, some are flourishing due to effective risk management.

“You always wanted a seat at the table, and now you have one. Risk managers are coming to the forefront and need to be more strategic. They need to play a more important role and work more diligently with company directors and shareholders,” Nelson said.

Graham noted that there is still a divide between the organisational risk team and communications team, and this can have an impact on levels of public trust. “It is time for risk management to come to the party with company leadership and corporate communications—and current global circumstances provide a valuable opportunity for that,” she said.

Kunreuther noted that organisations are faced with a major shift in thinking as they wrestle with circumstances that the world has never seen before—and that will have a direct impact on the way their reputation is perceived.

“Many organisations are reconsidering their operations and how they move forward. We can no longer think in terms of short-term events because catastrophic events such as those being seen around the globe today, were not previously considered.

“The current scenario presents an enormous challenge, but it is also a paradox. There are significant opportunities too,” he said.

“Risk management has an opportunity to educate the industry and create greater awareness.”
Penni Nelson, Hillwood

Nelson said that if the re/insurance industry does not pay attention, it will have a negative long-term reputational impact.

“However, the industry should not dismiss the opportunity to do something entrepreneurial—and working closely with risk management will provide this. Risk management has an opportunity to educate the industry and create greater awareness, although it will require some behavioural and bias changes,” she added.

The panel agreed on the importance of putting into action what has been said. Paying lip service and not carrying out the proper level of governance and purpose creates an unsustainable organisation.

Graham added that it is no longer about insincerely supporting concerns about reputation because organisations will face both internal and external scrutiny.

“It’s time to get the basics right. When it comes to the value of trust and reputation, the re/insurance industry cannot be left behind,” she concluded.

To view the full Re/insurance Lounge session click here

Image courtesy of Shutterstock / Ondrej Prosicky

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