NU Online News Service, Oct. 1, 3:47 p.m. EDT
Demand will increase for in-house risk managers and exploration of enterprise risk management opportunities and better risk data will characterize the future risk world, Aon insurance brokerage forecasted.
The Chicago-based concern gave that analysis in its Crystal Ball predictions paper on how companies will and should shift their approaches to risk management.
The paper also looks at how the insurance and risk industry must adapt to support global business in changing times, in addition to developments in captives and risk technology.
Key findings include:
o More companies will appoint chief risk officers to meet growing risk, governance and continuity expectations and an increasingly broad skill set will be required to go beyond simply introducing best practice policies and procedures to fundamentally change behaviors.
o To focus on managing opportunities in addition to threats, risk management must become an integral part of other management processes, such as product development. Proper consideration of risk at the outset minimizes downsides and proactively manages product opportunities at the time when influence and control are high, and cost of doing so is low.
o Increased quantification of risks to achieve better understanding of exposures, devise strategies and improve broking negotiations. More data and objective performance indicators will be used to ensure that a company identifies and grasps the issues that may have a negative or positive effect on their balance sheet.
"The economic downturn took the world by surprise and reinforces the urgency to build upon companies' robustness so that all stakeholders are ready to respond to challenges and exploit opportunities," said Marguerite Soeteman-Reijnen, chief broking officer in EMEA [Europe, Middle East and Africa] of Aon Risks Services.
"Risk managers therefore need to be carefully guided through the total cost of risk on their balance sheet, analyzing, assessing and determining their strategies toward the more complex and increasing number of risks in today's world. The insurance industry must meet clients' requirements and stand the test of time, particularly during economic despair," said Ms. Soeteman-Reijnen.
Scott Nicholl, senior consultant at Aon Global Risk Consulting, said, "Risk managers will be catalysts for change in risk-related behaviors."
And he added that it is crucial that risk managers need to think in the long term and are involved in strategic planning. "This way, they will champion frameworks for managing risk that will be integrated across organizations and tangibly contribute to the organization's success through improved business performance and demonstrating compliance," he said.
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