RiskTech Forum

Chartis: The Case for Enterprise Risk Management in Insurance

Posted: 8 March 2017  |  Source: Chartis


In the insurance industry, while enterprise risk management (ERM) is a concept that’s often talked about, it remains somewhat misunderstood and under-utilized. Increasingly, however, major macro forces are making ERM an essential part of insurance companies’ ongoing operations, specifically:

Against a backdrop of low interest rates, volatile markets and depressed returns, ERM can offer insurers a better, more robust approach to managing risk, enabling them to release significant trapped value. Insurers should now create virtue out of necessity, moving beyond regulatory compliance to develop cost-effective, flexible and forward-looking ERM for the future, realizing the benefits of an enterprise-wide approach to risk management.

ERM provides value in three main areas: a) strategic strength (an enhanced outward- and forward-looking ability to manage risk and do better business); b) new insight (thanks to the vast amounts of data insurers have to process, and the new technology they must embrace); and c) managing the problem of operational risk (OpRisk) to increase insurers’ resilience and effectiveness.

But many insurers run another risk: of not properly implementing ERM – which can prove highly detrimental. Success with ERM requires preparation, integration, cultural change and the right people in place (increasingly the right Chief Risk Officer [CRO] – a role taking on growing strategic importance). With the correct approach, ERM can be more than just a talking point. It can change your business.

To succeed in the next five years, insurers will need to seize the opportunity in 2017 to start the strategic transition from compliance to ERM in the way most appropriate for their business, and under the direction of the CRO.

This report examines the changing nature of risk, and the changing nature of ERM – as well as its growing importance as a way to generate real value for insurance companies. It also identifies the key steps insurers must take to successfully adapt to the strategic transition they will have to make.

The time to seize the ERM opportunity is now.

(For this report we interviewed a number of insurance professionals around the world for their insights into trends in the industry, and the current state of ERM programs. Selected quotes appear throughout).

Please register or log in to download the report.