Insurance:: GIAS “Phase II”– turning threat into opportunity


I should pay Warren Buffett a royalty (not that he needs it) for excessive use of this phrase:

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“be greedy when others are fearful and fearful when others are greedy”

But few can doubt that we are paying the price for greed. Whether we are all more fearful could be debated but we are, certainly, financially, socially and environmentally  “poorer” for the experience. Hopefully, we are “wiser”!?

For obvious reasons the financial sector is fearful of what the future holds for them because of the implications of new “mechanisms” that are intended to avoid a repeat of financial meltdown. One thing for sure is that, as much of the cost of increased regulation, falling or unpredictable margins, etc. will be passed on to customers.

How hard a sell will that be for “reputationally damaged” institutions that have, knowingly, abused the trust they once enjoyed???

How much more attractive will their actions (and subsequent inaction) make, innovative propositions, from existing competitors and new entrants look?

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 This perspective from KPMG SHOULD serve as a red flag for insurers BUT, then again, so should so much of what has been written on: the lack of customer trust; need for transparency – reporting, operational, product, pricing; inherent risks – seen and unseen – in “Capital Markets”, portfolios and individual organisations; limitations of conventional risk management tools and techniques; failures of Corporate Governance, Regulation; IT process and product complexity; global fragility – market volatility, uncertainty, complexity and ambiguity; underestimation of the nature and impact of systemic risk and “low probability high impact” events.

Taken collectively any CFO would be entitled to consider the number of zeros coming off the bottom-line! Viewed as independent elements to be addressed, over a period of time, by project teams would almost certainly increase complexity, probably add to the “final (and ongoing) cost, threaten the success of the overall initiative and the resilience of the enterprise. But help is at hand…

MACRO: viewed and approached “top down” it is the kind of “change management” task and budget that would have many re-assessing their future with an organisation.

REDUCTIONIST: attempting to break the problem down and treating functions that are INTERDEPENDENT, as if they were independent – without any means of mapping or tracking causality – “constantly shifting sands”!

HOLISTIC: the organisation is a dynamic [non-linear; no single equilibrium] complex system and needs to be treated as such. Susceptible to major impact from minor event. Understood from the “inside out” [i2o] with the ability to observe at the most appropriate scale* [micro – macro – holistic] to maintain function, effectiveness and resilience throughout and beyond any process of transformation.

*Complex systems are “fractal” and “self-similar” e.g. individual, team, unit, department, division, territory, group, etc. Systems of inter-connected “nodes and hubs” within systems, ecosystems, connected to networks…within and across domains!

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