Wednesday, 4 May 2011

Aon Global Risk Management Survey

One for you ERM purists, AON released their Global risk management survey this week, and as a biennial event, we should be delighted to benefit from their largesse (think twice about printing it all - half is arty photos!).

Remember for the purposes of the Insurance sector we get a little diluted by small companies and non-financials in these surveys - 960 in the total count, so great for benchmarking, though half of respondents were "risk managers", so a little light on seniority.

My eyes were caught by the following;
  • Insurance sector has Regulatory change down as number 1 Key Risk - thanks guys!
  • Preparation for business interruption and talent management key risks have gone noticeably backwards across the board since 2009
  • TCOR (total cost of risk) not necessarily used in any growing pattern for evidencing value-added by risk management, and seemingly too hard for some companies to consider. Amazingly, less than 40% use internal risk management costs in calculating TCOR, which smacks of laziness on the function's part (or maybe even nervousness).
  • Senior management intuition as the primary method for identifying and managing major risks - try that one under Sol II guys!
  • CRO role becoming more popular, though not dramatically so. 60% have no plans to recruit one.
  • Majority of respondents still have risk reporting and functionality as finance-centric (over half report risk through CFO)
  • Latin Americans don't have regulatory risk in their Top 10 - as the recent actions of the Argentinian and Brazillian protectionist regulators have shown, this is well founded!
  • Less than a third of respondents had "Increase Shareholder Value" or "Increase Return on Investment" as primary benefits in investing in risk management. Again, a frightening lack of ambition in my view, and incredibly regressive.
  • "Increased focus from regulators" one of the main drivers for strengthening risk management in the last 2 years - I suspect this would be number 1 for Insurance-only respondents.
  • Number of respondents with a risk management function actually fell since 2009! They note the profile of respondents has probably driven this, so amusing rather than startling!
The TCOR piece is probably my main carry-forward from this. I like the detail on who uses it, why/why not, and which components could be used or reasonably left out. I can't help but feel the measure will help in Solvency II, maybe just for functional reporting on value added.

No comments:

Post a Comment