Resilience:: foundation for a sustainable model

Resilience risk complexity uncertainty graphicOrganisational restructuring, talent shortages, and greater technology risks are some of the key transformation-driven risks for the rest of the year ahead, according to PricewaterhouseCoopers‘ latest Risk in Review report.

According to PwC ‘change’ is now happening among the more enlightened…but who are they, where are they and how the hell did the break-out from the thinking that has been a major contributory factor in the run-up to ‘financial meltdown’!

Businesses can use horizon scanning and early-warning systems to spot trends, and employ stress testing to identify key vulnerabilities. More flexible risk appetite statements, corporate-wide contingency planning and a risk-aware corporate culture that challenges conventional wisdom are all powerful tools that can help organizations better manage emerging risks.

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Spot the difference for underwriters

This is an aerial view of main location of the risk to be insured: Generic plc.

Company activities at and associated to the premises include: Property Owners; Manufacturing (incl. use of heat & work at height); Assembly (incl. clean room); Warehousing; Import/Export (loading/unloading – incl. quayside); Plant Owner/Operators; Wholesale; Distribution; R&D; Design: IT (mainframe); Admin./Accounts; Training, etc.

For the purposes of the task, let us assume that they are 2, competing, risks both with identical processes, sums insured, limits with similar EML’s, operational structure, growth history, financial performance, global customer/supplier footprint, credit profile, risk management and claims experience. The type of enterprises that are within the target range of risks that you are charged with securing in a competitive market place.

However, one of the risks is, significantly (measurably), more resilient than the other…sufficiently so that it could provide you with the competitive advantage required to secure the account. So, as an insurance, credit or financial risk underwriter:

Q. How do you identify and differentiate between the good and bad risk, providing a verifiable basis for an underwriting decision that enables you to win the business? Read more of this post

IBM Insurance:: does the industry really care what customers want? I wonder…

It’s about time I revisited an IBM report from 2008. Why? Because it would appear that NO-ONE IN A POSITION OF INFLUENCE IN INSURANCE SAW, READ, UNDERSTOOD OR ACTIONED ANYTHING THAT IT S-P-E-L-L-E-D OUT!!!

Insurance trnsparency and technologyGuys like Christian Bieck do some really interesting research work. Work that the industry would do well to pay more attention to and this report is a great example of just that: Trust, transparency and technology

How’s this for an introduction?

…what do buyers of insurance really value in insurance? …we found that THE insurance customer and THE customer value do not exist anymore, if they ever did. Insurers who take into account the varied attitudes, values and resulting actions found in today’s markets will have an edge in reaching tomorrow’s customers – and retaining them, despite ever fiercer competition. To achieve this, insurers will need to master trust, transparency and technology…

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An INCOMPLETE guide to risk-based insurance decisions!:: new report from PwC

The momentum that MAY bring us to a, much needed, "tipping point" in Risk Management is certainly gathering!

imageHOWEVER, this latest report, Strategic risk management: Facilitating risk-based insurance decisions from PwC "disappoints" despite identifying some key elements! It illustrates where we, currently, fall well short of what is required and offers a, dangerously incomplete perspective.

I could not agree much more with the following blurb from PwC. BUT, having skimmed through the report, I do find it incredible that, in 2012 and knowing what we do about the inter-connectedness of business in the Digital Age, a report such as this (that runs to 17 pages) contains no mention of COMPLEXITY!

Many enterprise risk functions do reasonably well identifying, modelling and mitigating "knowable" risks, but face a bigger challenge identifying, quantifying and mitigating more ambiguous ones, such as the ones that characterized the recent financial crisis. Accordingly, we believe that insurers require a strategic risk management (SRM) solution that identifies, assesses and economically manages potentially enterprise-threatening losses over time; in other words, SRM is a way to mitigate evolving risks before they spiral out of control.

Creating a strategic risk management solution for insurance businesses: PwC.

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Still subjective, still correlation but getting closer… :: Accenture identify characteristics of "The Risk Masters"

So, if reports from, the likes of AIRMIC “Roads to Ruin”, World Economic Forum/Zurich, FSA (on RBS), PwC, IBM, UK Government, Zurich and Towers Watson (to name a few recent contributors) have failed to penetrate engrained – but flawed – belief systems, it may be a forlorn hope that Accenture can succeed with this report…but, we live in hope! Hence my resolve to share this kind of useful information as widely as possible.

WEALTH WARNING: all risk management is not made equal and it should not be solely about risk…but reward!

Click to EnlargeBlack Swan resilience

More reports into the subjects of risk management, complexity and compliance can also be found here. Of the recognised Consultancy firms it certainly appears that AT Kearney have the best understanding of the subject of complexity but, unlike Ontonix, NONE, to date, have presented a, measurable, definition or means by which an organisation can begin to explore the issue themselves.

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