Let’s take a closer look at the integration challenge for the insurance risk function, based on Accenture’s 2017 Global Risk Study findings.

Just as talent has posed an ongoing challenge for risk management, so has integration. Insurers have struggled to thrust risk management out of its silo for some time—but the nature of the problem has changed.

Our 2017 Global Risk Management Study observed, back in 2009, that breaking out of siloes was an issue for financial services risk leaders. Two years later, the concern had broadened; insurers sought to build a cross-functional risk culture for their organizations. By 2013 the cross-functional effort had paved a direct path for risk leaders to the Chief Executive Officer, solidifying the risk function’s role as a business partner.

In 2015, risk leaders held a “seat at the table,” but now, in 2017, our study finds risk leaders still grappling with the initial integration challenge (for more on the evolution of risk management, view our interactive timeline).

Click to view larger image

 

 

 

 

A number of factors come into play, particularly for large insurers, around integration:

  • Operating across multiple jurisdictions, with risk teams spread across several locations
  • Regional differences
  • Specialized risk types
  • A variety of business units
  • Outsourcing of risk reporting and of technology implementation & maintenance

How can insurers address this multi-layered concern? Both centralized and decentralized solutions offer advantages.

Centralization results in an immediate aggregate picture for analysis. Central frameworks and tools provide a standardized, coordinated response to regulation, a consistent set of rules for managing all risks and the ability to perform complex and high-value calculations to measure risk exposure, liquidity and solvency.

By contrast, decentralization means local or specialized teams focus on local regulatory requirements and/or market-specific topics. Half (52 percent) of insurance risk leaders responding to Accenture’s study say organization-wide risk processes do not capture the nuances of local markets, while 65 percent say local markets struggle to balance local risk management with organization-wide risk priorities.

The integration conundrum is ever-present, but influential risk leaders can work toward a risk management culture that is effective across an enterprise. In my next and final post, we’ll put everything together around insurance risk management.

Submit a Comment

Your email address will not be published. Required fields are marked *