Without effective risk management, the insurance industry will not meet policyholders, shareholders, peers, rating agencies and regulators expectations, according to Deloitte report.
“The global economic crisis that started in 2008 which resulted in the biggest collapse of financial institutions since the great depression, has taught us many lessons. The need for prudent preparedness to deal with potentially disruptive events, in addition to the enhancement of risk management capabilities and becoming risk intelligent are key to successfully addressing the current environment created by the huge financial losses suffered by large and small companies alike,” said Fadi Sidani, Partner in Charge of Enterprise Risk Services at Deloitte Middle East.
“They are also vital to the successful future planning for risk sensitive industries such as insurance,” he added.
An appropriate risk management structure for a company would be one in which the Chief Risk Officer does not take direct ownership of any risks, and is independent of the business units. He would accordingly serve as a trusted partner to provide risk oversight so that business units can make risk-intelligent decisions.
Clear roles and responsibilities must be prescribed to the board of directors, board committees, senior management, and everyone within the ERM function and other risk-related personnel. Risk ownership, roles and associated accountabilities must be structured to ensure independence between management and risk measurement.
Insurance providers hold sensitive data that their policyholders, business partners, regulators, shareholders and board of directors expect them to protect. There is an immediate need to take measures to understand the sensitive information the insurance provider holds, how it is controlled and how to prevent it from being leaked.
“There is a need to share best practices and learn about needed initiatives within the realm of insurance in the Middle East,” Sidani, added.