Less ego and more combined focus
The insurance industry is going through unprecedented change, globally and locally, due to several global events, such as the global recession, the continuing fallout from Russia’s invasion of Ukraine, and lingering COVID-19 concerns.
FAnews spoke to Dr Hermie le Roux (PhD), an independent Senior & Executive Level Facilitator & SME - Enterprise Risk Management about the risks in 2023 and what these risks mean for insurers and more.
The biggest risks
The key questions that we need to ask are: “WHAT can go wrong and HOW are we going to fix it?”
Globally, the impact of the recession, infectious diseases, cybersecurity, climate change and political uncertainty will remain as the biggest risks, according to Dr le Roux. Locally, South Africa becoming a failed state due to e.g., corruption, governance failures and public service delivery failures, i.e., water, electricity and infrastructure development remains the number 1 risk. This means that labour and civil unrest will remain ever present and increased legal and regulatory compliance requirements also put compliance risk on the key risk map.”
What do these risks mean for insurers? “In normal English, insurers have to develop products that can keep up with the speed of change and as such satisfy the ever-changing needs of their customers. To survive and remain relevant, insurers must build on the “forced” agility that was developed in response to growth and profitability challenges due to Covid 19,” she said.
“They must strive to maintain the momentum of creative adaptation established over the past few years. What does this look like? System upgrades, talent retention, acquisition and development strategies that cater to the new challenges that employees face, whilst establishing an organisational culture conducive to proactive, innovative, and customer-centric decision-making,” she continued.
“Therefore, the circle of trust and judgement has grown bigger in response to recent global events. Insurers should expect to be increasingly judged by stakeholders on their response to broader sustainability priorities such as climate risk, diversity and inclusion, social equity, and transparent governance - all of which could become competitive differentiators in the battle for talent, investors, and market share. In short, being and becoming the responsible corporate citizen that King IV (Code on Corporate Governance) speaks,” she added.
Ensuring a TOMORROW
To ensure a TOMORROW, Dr le Roux said, “Organisations need to focus on integration through collaboration and honest communication. Sustainability and a future will only be the result of less ego and more combined focus.”
Leaders must cultivate an attitude of authenticity, simplicity, logical thinking, honesty, excellence, passion and respect amongst their organisational stakeholders by embedding the following fundamentals, i.e.:
- Develop solutions that are executable by ALL staff – “Hands and feet”
- Transform best practice and organisation-wide principles into practice-based deliverables – “Show me”
- Develop a risk voice that personifies the organisational culture and the desired risk culture – “Be you”
- Integrate experience with best practice and academic theory to develop applied solutions – “Fit-for-purpose”
“Risk-related events are occurring more often and rapidly. A just-in-time organisational model will not keep the ship afloat. One must rather consider a just-in-case approach where scenario analysis, transparency and open communication are the key drivers for survival.”
In conclusion, Dr le Roux suggested that leaders must encourage a value-adding mindset for risk management. It is NOT a compliance activity, but rather a decision-making tool that will assist management to create and protect value for the organisation. Improve collaboration between stakeholders by establishing relevant relationships that will facilitate open and honest communication regarding risk, opportunity and control effectiveness. Embed a risk mindset by aligning strategic planning and risk identification cycles in order to optimise resource allocation. And last, but not least, be honest about “what can go wrong” and “how you are going to fix it.”
Writer’s Thoughts
With risks festering… one wonders what the rest of 2023 will be bringing us. But as Dr le Roux said, (should disaster strike), a just-in-time organisational model will not keep the ship afloat. One must rather consider a just-in-case approach where scenario analysis, transparency and open communication are the key drivers for survival. If you have any questions please comment below, interact with us on Twitter at @fanews_online or email me - myra@fanews.co.za
