URGENT: Another call for change – Towers Watson [Insurance Insight]


I recently complimented Towers Watson on another report “Extreme Risks…” and mentioned that I was reviewing this new report. I’m still not finished that (I really want to do it justice) and, although I recognise that there aren’t too many people hanging on for my comments, wanted to draw attention to it in the interim.

Following is a brief extract and link to the report.Thinking Ahead Group: function

Their “Thinking Ahead Group“, led by Tim Hodgson, appear intent upon flagging issues that others, from the insurance industry and risk professions, patently, prefer to shy away from…

WHATEVER YOU DO PLEASE DON’T BURY YOUR HEAD IN THE SAND TOO!

image…risk models fail to deal adequately with complexity and in particular with endogenous risk (the risk that investors’ own decisions and actions themselves alter the risk landscape)…

…besides emphasising a greater understanding of risk, the research also includes suggested improvements for good risk measures, notably the use of Continuous Value at Risk as a risk measure and the introduction of risk dashboards.

“Models have value, but only where they are employed with good understanding. By implication, current practice needs significant enhancement,” Hodsgon concluded.

“Organisations need to develop a risk culture where responsibility is shared appropriately and risk matters are given appropriate prominence on agendas and in communication.”

via Management not measurement key in handling risk – Insurance Insight.

There have been several reports, from authoritative sources, that can only see the future as a projection of our past: a major, deeply flawed and DANGEROUS ASSUMPTION. Others are much more enlightened…

The economic downturn beginning in 2008 triggered new interest in risk management, driving adoption of truly holistic approaches where managing risk is inherent to every decision. Today, leading organizations are pushing these concepts further to develop enterprise-wide business resilience strategies. They strive to make the ability to respond rapidly to all kinds of unexpected events—opportunities as well as threats— part of the corporate culture. This means building a business resilience strategy that engages everyone in the organization.

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