Close to 75 percent of global insurers insist they use enterprise risk management regularly to evaluate their business strategies, according to a new Towers Watson survey.
At the same time, carriers that rely on ERM as a vital component of their business plan seem much happier with their ERM performance. About 73 percent of insurers who closely integrate the practice into their operations said they are satisfied with the ERM results. For those that don’t rely as heavily on ERM, that satisfaction dips to 38 percent.
“Companies that strive for strategic value in their risk management function—as opposed to simply using ERM for regulatory compliance—typically differentiate themselves, in part, by integrating risk management into their strategic decision-making process from the beginning,” Martha Winslow, senior consultant of Towers Watson’s Americas P/C Practice, said in prepared remarks. “Too often, senior management incorporates risk management later in the process or even after it is complete, when there’s not much chance of it influencing critical decisions.”
Towers Watson’s eighth biennial survey on insurance ERM attracted nearly 400 executive responses. Most were C-suite level, representing property/casualty, multiline, reinsurance and life insurance companies in North America, Europe, Asia Pacific and other regions.
Here are some survey response details:
- Overall insurers’ satisfaction level with their ERM performance grew to 63 percent, up from 52 percent. That’s driven largely by a double-digit increase in Asia Pacific, though there were smaller gains in North America and Europe.
- 61 percent of respondents said regulatory requirements have been a key role driving how they approach EMR practices.
- 46 percent said regulatory-related issues offer the biggest obstacles toward implementing ERM over the next year.
- 78 percent of respondents said their ultimate vision for their company’s ERM capabilities has expanded over the last year.
- With that in mind, 78 percent said risk culture was the most important aspect of their ultimate ERM vision. About 76 percent, said risk tolerance was the biggest factor in their ERM implementation.
Source: Towers Watson