We live and work in a riskier worldNew challenges for risk managers

How adjusters can help

FUEDI General Assembly 2014

Purpose

What FERMA is doing

Where we are22 member associations in 20 countries

4336 individual members who are responsible for risk management and / or insurance in their organisations

Who we are

Who am I?

So that's 2 coups, one tsunami, one major flood, one major red shirt demonstration, 2 major yellow shirt demonstrations - all in the space of 8 years

Risk management

Why do you have brakes in a car? So you can drive faster safely. Why do you have good risk management? So you can pursue your business goals more energetically - FT May 2008.

But the driver needs to know where the brakes are and how to use them - JG May 2014

It's risk management Jim but not as we've known it

A strategic business discipline that supports the achievement of the organisation's objectives by addressing the full spectrum of its risks and managing the combined impact of those risks as an interrelated risk portfolio

The first standards committee

Who Is Primarily Responsible for ERM?

Source: 2013 RIMS Enterprise Risk Management (ERM) Survey. All rights reserved.

Source: 2013 RIMS Enterprise Risk Management (ERM) Survey. All rights reserved.

Cyber attacksCyber attacks

Fiscal crisis Fiscal crisis

Unemployment &

under-employment

Unemployment &

under-employment

Income disparityIncome disparity

Extreme weather events

Extreme weather events

Water crisesWater crises

Massive data fraud / theft

incident

Massive data fraud / theft

incident

Climate changeClimate change

Failure of financial

mechanism / institution

Failure of financial

mechanism / institution

Profound political / social instabilityProfound political / social instability

Source: World Economic Forum, Global Risks 2014

And they are prioritised…

Top-rated risks – perceptions survey

Political and social

instability

Unemployment and underemployment

Imp

ac

t if

the

ris

k w

ere

to

occ

ur

Likelihood to occur over the next ten years

Economic

Environmental

Geopolitical

Societal

Technological

Critical information infrastructure breakdown

Natural catastrophes

Mismanaged urbanization

Income disparity

Data fraud/theft

Biodiversity loss / ecosystem collapse

Water crises

Climate change

Cyber attacks

Fiscal crises

Interstate conflict

Failure of financial mechanism or institution

Extreme weather events

Interconnections identified

Graphic to be replaced

Interconnections map – perceptions survey

Source: World Economic Forum, Global Risks 2014

Risk management will become risk leadership

Positionrisk management will continue to assume a higher prioritystrong board involvement advocated to facilitate strategic and enterprise-wide riskmore energy devoted to defining risk appetite, tracking, measuring and analysing risk

Challengesrisk ownership and communication at all levels links between risk management and strategic planning and management communication between the board and risk managementrisk based incentivesrisk management talent pool with the right talentrisk forecasting

There is evidence suggesting well risk managed businesses are more profitable

Principles of the resilient organisation

• Have an exceptional radar

• Value and build strong relationships internally and externally

• Leaders that are respected and respectful

• Have the ability to respond rapidly

• Diversified resources

• Top Management believe they should spend more time on strategy, talent and risk

• Risk Managers must develop business leadership skills become a business discipline add significant value or stay as fragmented technical people called upon only when

needed

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Source: Roads to Resilience AIRMIC 2014

Challenges to achieving resilience

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The Risk Manager•Overcoming barriers

don't over analyse

•The role is changing no hiding behind rules and regulations valued senior advisor get out and engage

•More about culture, behaviour, mind-set and insights

•Enablers and behaviours People and culture Business structure Strategy, tactics and operations Leadership and governance

Managing cyber risk is not a project

17Source: Global Information Security Survey 2012' by Ernst & Young (2013 report now also available)

How to improve cyber security

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Source: 10 Steps to Cyber Security – UK Executive Companion' produced jointly by GCHQ, BIS and CPNI

Challenges

• Increasingly complex and rapidly changing world the pace of complexity and change will increase

• Demands for innovative solutions not products those who do not innovate are at risk

• Focus on solution design which is cover driven not the value added and what is being purchased

• Knowledge drain where are the risk leaders?

• Procurement involvement focus on price at the expense of solution and quality

What every risk manager wants

Rapid, hassle-free payment of claims

A more business like approach to claims handlingMore pre-claims discussions to clarify how the claims will be paid The can't pay, won't pay attitude to disappearFocus on creating a smooth process Insurers who listenClaims as a business not a legal issue – litigation a last resortRisk managers must take controlOpportunities for risk managers to demonstrate they do a great jobThe basics have to be rightRoles and responsibilities at times are unclear

This is what we buy in the first place

Source: Commercial Risk Europe Risk Frontiers Seminar Report 2013

Joined up thinking and action

It's too late after the eventInformation sharing should improveService levels should be defined and agreedProcesses defined and mappedProcesses communicated and embeddedTraining of those involved Communicate, communicate, communicatePlayers should be part of the renewal processDefence Response

There are more than two in this marriage

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