Accenture 2015 Global Risk Management Study: Insurance Report Key Findings and Insights

2015 Global Risk Management
Study
Industry: Insurance

Key findings
2Copyright © 2015 Accenture All rights reserved.

Source: Accenture 2015 Global Risk Management Study – Insurance respondents. Access at: http://www.accenture.com/riskstudy2015
5 key priorities
Risk Management in the Insurance Sector
1 2
3 4
Making more of data and analytics
66%
of surveyed insurers
are increasing
investment in data and
analytics.
30%
plan to grow
investment by more
than 20%.
Getting to grips with digital
79%
of insurance
respondents believe
digital will be
a major risk.
32%
say their risk function has
a high level of expertise
to influence strategy
and major decisions on
social media.
Using operational risk to deliver growth
74%
of insurance
respondents expect
cyber and IT risks to
become more severe.
65%
expect fraud and
financial crime to pose
a greater concern.
Building a culture to withstand disruptive change
7%
of surveyed insurers
say they have a strong
and consistent risk
culture today.
23%
think they can
achieve this over
the next two years.
5
Ramping up recruitment and retention
7% of insurance respondents say
their teams have sufficient
resources in specialized areas.
21% hope to have them
in two years’ time.
86% expect to invest more in risk
capabilities in next two years.
For more information, please visit: www.accenture.com/riskstudy2015
Source: Accenture 2015 Global Risk Management Study – Insurance respondents
© 2015 Accenture. All rights reserved.
Growth and digital
44%
For insurance respondents to the Accenture 2015 Global Risk Management Study growth is back on the agenda and digital presents new
opportunities.
of surveyed insurers have a greater
appetite for new product development.
43%
have a greater appetite for
new alliances and partnerships.
85%
say risk function can leverage
digital to become a business partner.

61%
of risk masters
believe their risk
function can play
a critical role in
enabling
profitable growth.
54%
of risk masters
believe they can help
enable this growth
“to a great extent”.
35%
of non-masters
report
the same view.
Around 1 in 10 respondents to the
Accenture 2015 Global Risk
Management Study are “risk
masters”.
10%
61%
of risk masters agree
strongly that emerging
risks, such as cyber and
digital, are consuming a
greater proportion of the
CRO’s time.
35%
of non-risk
masters feel
strongly
about this.
61%
of risk masters agree
strongly that they
employ dedicated
technology specialists
to help manage digital
risk.
27%
of non-masters feel
the same.
Stronger focus on profitable growth
Stronger focus on emerging risks Growing digital experience
For more information, please visit: www.accenture.com/riskstudy2015
Source: Accenture 2015 Global Risk Management Study – all respondents
What makes a risk master?
© 2015 Accenture. All rights reserved.
Better handle on regulatory and compliance
More extensive use of analytics
37%
of risk masters
believe strongly that
regulatory change is
receding in relation to
other requirements.
25%
of non-risk
masters see
regulatory
change receding
in the same way.
36%
of non-masters
feel the same.
More risk masters make extensive use of analytics to manage key risk categories
including
fraud and financial crime, cyber and IT risk, and credit, market and regulatory
risks.
Risk masters are also more likely to be investing heavily in digital technologies.

Contents

Source: Accenture 2015 Global Risk Management Study – Insurance respondents. Access at: http://www.accenture.com/riskstudy2015Source: Accenture 2015 Global Risk Management Study – Insurance respondents. Access at: http://www.accenture.com/riskstudy2015
Contents
A Our methodology
B Understanding the evolving environment
and context for risk management
1. Risk functions to get to grips with digital
2. Strengthen data and analytics capabilities
3. Agile and effective operational risk management adding to
future business growth
4. Increase recruitment and retention efforts
5. Cultivate a consistent, resilient and integrated risk culture
C Bridging the gap

Our methodology

Introduction
4th iteration of our Global Risk Management
Study (2009, 2011, 2013)
2015 Global Risk Management Study:
Paths to Prosperity
For the 2015 study, we surveyed 470 CFOs,
CROs, CEOs, CCOs and CDOs involved in
their organization’s risk decisions
Respondents came from North America,
Europe and the Asia Pacific regions
Survey focused on three industry sectors:
Insurance, Banking, Capital Markets
In addition to the survey we conducted 50
qualitative client interviews

2015: Paths to Prosperity
Risk management continues to make
a crucial shift but choices need to
be made.
Seen as a collaborative partner to
enable business goals instead of a
controlling function to be
circumnavigated.

Study demographics
We surveyed 470 C-suite officers across all geographies and
12 countries
Country Geography Regional target Respondents
Australia
Asia
Pacific
150
30
China 30
Hong Kong 30
Japan 30
Singapore 30
UK
Europe 170
50
Germany 30
France 30
Spain 30
Italy 30
USA North
America
150
100
Canada 50
Total 470 470
Company size Total
Between US$1bn and US$5bn 235
Revenues over US$5bn 235
Total 470
Respondent Total
Chief Risk Officer 141
Chief Executive Officer 78
Chief Financial Officer 147
Chief Compliance Officer 28
Chief Operations Officer 31
Chief Data Officer/CIO 45
Total 470
Sectors Sector count Asia Pacific Europe North America
Banking 150 50 50 50
Capital Markets 170 50 70 50
Insurance 150 50 50 50
Total 470 150 170 150

Understanding the evolving environment
and context for risk management

12
Section 1:
The new environment and context for risk management
Figure 1: Change in senior management’s appetite for risk
Copyright © 2015 Accenture All rights reserved.
Key Findings and Challenges
• Compared to two years ago, surveyed senior
management’s appetite for risk has changed to be
more focused on business growth
• In an environment with low interest rates and small
margins, we believe awareness of opportunities can
become more critical
• In our view, market expansion is likely to be
concentrated in digital endeavors
Actions to Consider
• Position risk management as a strategic business
partner that can help the business exploit new
opportunities
• CRO should be involved in strategic planning to help
align business objectives with business risks and
required modifications to the overall business model
• Challenge risk function to anticipate problems
Greater risk appetite

13
Section 1:
Figure 2: Involvement of the CRO in various aspects of the organization's decision-making
process
• According to insurance respondents, risk management
plays a vital role in providing oversight across the
business and connecting the dots between different
strategic plans
• The CRO (and risk management) is a key decision
maker in many areas such as capital management,
strategic planning, business and operating model
changes
Actions to Consider
• Use the risk organization to help identify and share its
insight into the portfolio level view of risks inherent to
the business
• Position risk capability as a steering function rather
than a reporting function
• Develop skill sets that encourage a more dynamic and
less static approach to the ambiguity that may
surround business issues
%
Key decision maker Among the decision makers
The CRO plays no role in major business decisions Don’t know
Advisor to the decision maker(s)
Selection and implementation
of IT platforms and tools
% % %%% 33 17 31037
Capital management % % % %%46 35 12 25
Strategic planning 41% 15% 16%37%
Business model change %37% 36% 15% 111%
Digital initiatives %30% 41% 19% 37%
Product development 35% 37% 19% 1%7%
Pricing 39% 20% 1%9%32%
Alliances and partnerships 44% 17% 2%6%31%
Marketing/branding initiatives 37% 17% 1%11%35%
Changes to operating model 43% 14% 1%6%37%
Recruitment/talent strategy %35% 18% 213%33%
Human capital 35 21 2935 % % %%%

Figure 3: Expectation that the organization will meet the compliance deadline for solvency
regulation in its region
14
Section 1:
• Less than a third of insurance respondents are
confident that they are on track to meet compliance
deadlines
• More than half believe they will still require
improvements in order to meet expected compliance
deadlines
Actions to Consider
• Assess the areas for improvement early in process to
allow for adequate time for implementation to meet
deadlines
• Understand readiness and identify potential areas for
IT investment to support compliance requirements

15
Section 1:
Figure 4: Estimated total cost (in its region), including internal resources to comply with
Solvency/other primary regulation, up to and including implementation in 2014 and beyond
• Cost of compliance has been significant; nearly 30% of
insurance respondents have invested between $26-50
million
• 15% say they have spent more than $100 million to
comply
• Seven out of 10 surveyed insurers say that the cost of
complying with primary regulation has been higher than
expected
Actions to Consider
• Seek additional returns on investment by increasing
the efficiency and effectiveness of the compliance
process
• Leverage compliance as a source of competitive
advantage by examining the threats and opportunities
embedded in the regulatory environment

16
Section 1:
• According to insurance respondents, risk functions
have made large strides in enabling long-term
profitable growth and contributing to innovation and
product development
• In our view, risk functions have used the increased
visibility around Solvency II compliance to make
gains in their level of involvement in more
strategic/growth goals
Actions to Consider
• Use enterprise risk management frameworks
embedded into governance and decision making
processes to strengthen cross-functional business
relationships
• Leverage additional visibility into C-suite to continue
gains in risk management’s role around revenue
generating agenda of the business – look to produce
portfolio-wide views of risks
Figure 5: How risk management contributes to the organization achieving its various targets
63%
78%
77%
76%
76%
78%
NA in 2013
NA in 2013
81%
72%
79%
69%
82%
78%
84%
74%
83%
74%
85%
85%
74%
75%
73%
82%
Infusing a risk culture in the organization
Reducing operational, credit, or market losses
Innovation and product development
Improving capital allocation
Reducing the cost of capital
Improving accuracy and integrity of data
Managing the increasing volatility of the
economic and financial environment
Managing liquidity and cash flow
Risk-adjusted performance management
Enabling long-term profitable growth
Reconciling the need for global
coordination and local regulatory coverage
Managing reputation with stakeholders
(including analysts, the media and the public)
2015 2013

Bridging the gap

18
Bridging the gap
To cope with the rising pace of digital and competitive industry
challenges, risk management should focus on five key priorities
Risk functions
to get to grips
with digital
Strengthen
data and
analytics
capabilities
Agile and
effective
operational
risk
management
adding to
future
business
growth
Increase
recruitment
and retention
efforts
Cultivate a
consistent,
resilient and
integrated risk
culture
1 2 3 4 5

19
Priority 1:
Risk functions to get to grips with digital
• Digital initiatives in our view represent an opportunity
for risk management to bring its strengths and
capabilities as a partner to the overall insurance
business
• However, insurance respondents indicate the level of
digital experience within their risk functions is currently
not high
Actions to Consider
• Become a voice to improve the understanding of
risk/reward tradeoffs in new digital business endeavors
• Evolve the risk organization and proactively position it
for greater agility to address the expected business
and organizational changes triggered by emerging
digital technologies
Note: “Guevara, a ‘revolutionary’ P2P car insurance service launches in the UK, The Next Web, July 1, 2014.

20
Priority 2:
Insurers to strengthen data and analytics capabilities
• Sheer velocity, variety and volume of data is a
significant challenge for respondents insurance
organizations; managing emerging digital risks is
another key challenge
• Other challenges include: gaining trust of business,
integration with other business functions and
skills/talent shortages
Actions to Consider
• Evaluate the potential changes big data can drive in
the industry overall
• Assess opportunities and threats that an industry shift
can bring
• Tackle operational risk by utilizing both internal and
external data
• Build in process efficiencies upfront to help manage
high velocity and volume of data
Balancing the need for local compliance
with expectations to be a global institution
Lack of budget to make necessary investments
Lack of engagement with risk issues
from senior management
Imperatives to maintain near-term
profitability
Lack of connectivity across existing
technology infrastructure
Managing emerging digital risks
Talent and skills shortages
Lack of integration with other
business functions
Gaining the trust of the business units
to advise on operations
Increased velocity, variety and volume of data
Balancing the responsibilities for controls
and compliance with the need for a more
commercial mindset
31%
37%
25%
43%
45%
23%
25%
45%
27%
43%
25%
49%
31%
39%
23%
47%
47%
29%
39%
39%
35%
33%
25%
37%
Insufficient talent in the risk function
Figure 6: The extent to which the various challenges impede the overall effectiveness of the
organization's risk management function
To a great extent To some extent

21
Priority 2:
Insurers to strengthen data and analytics capabilities
Figure 7: Risk management’s use of data and analytics to address the various types of risk
40%
• Data and analytics are most often used for market risk,
liquidity risk, operational risk and regulatory risk by
insurance respondents
• Fraud and financial crime, and operational and
regulatory risks are the most extensive users of risk
data and analytics
• IT platform selection and implementation are heavy
users of risk data and analytics
Actions to Consider
• Increase use of risk data and analytics to be more
extensive in key parts of the business; there are
significant opportunities for additional use of data and
analytics
• Work towards migrating data accessibility beyond the
walls of specific siloes in order to lay the foundation for
more significant future use of analytics
Extensive Moderate

Priority 3:
Agile and effective operational risk management adding to
future business growth
• We are seeing an increase in regulations concerning
the protection of customer data
• Operational risk is an increased area of focus
according to insurance respondents
• Cyber/IT risks top the ranking – probably due to
growing use of/and skills in social media by criminal
entities
• Legal risks continue to rank highly
Actions to Consider
• Minimize the historic silo dynamic between fraud and
IT risk management to help counter the threats with
both the CRO and CIO
• Understand cyber and IT security as criminals mature
rapidly in sophistication
• Increase transparency and timeliness of operational
risk processes to help create reports offering relevant
business insight
Figure 8: Expected changes to the severity of the various operational risks facing the
business over the next two years
Significant/slight increase

11%
13%
7%
21%18%
10%
33%
12%
36%
1 2 3
38%
4 5
23
Priority 4:
Increase recruitment and retention efforts
The risk team has
insufficient talent
resources to carry out the
functions it is asked to
perform
The risk team lacks
internal resources in
some specialized
areas (modeling,
emerging risks)
The risk team has
internal resources
even in specialized
areas (modeling,
emerging risks)
• Only 7% of insurance respondents have
resources/skills necessary to fulfill the evolving role
• Recruitment and retention of risk talent remains a
challenge according to respondents
• Areas with the greatest gaps coincide with areas of
greatest need (data management, cyber risk)
Actions to Consider
• Develop specialist teams to help address emerging
areas of risk (cyber, digital, social media) head-on and
learn by monitoring and analyzing real-time data
• Embed risk framework on an integrated, group-wide
platform. This favors contribution from all employees in
discussions on new risks – input can be reviewed
Figure 9: Statement that best describes the stage of maturity of insurer’s talent
management
Today Two years’ time

24
Priority 4:
Figure 10: Over the next two years, the skills and capabilities that will be most in demand
by the risk management function
• According to insurance respondents, data
management and analysis, and cyber risk
understanding are skills that will be most in demand
by risk functions
• Insurance is a data-driven sector and the
transformation taking place around big data should
continue to drive in our view the need for data
specialist functions
Actions to Consider
• Retain advantage over banks – 50% of insurance
respondents say they have data management skills to
a great extent versus 40% among banking respondents
• Enhance retention and development of scarce
specialized resources by offering cross-border, cross-
functional career path opportunities
Modeling
Knowledge and understanding
of digital technologies
33%
33%
29%
27%
26%
25%
21%
20%
19%
13%

25
Priority 4:
Figure 11: The expected change to the total level of investment in risk management
capabilities in the next two years
• Over 85% of insurance respondents expect to increase
their investment in risk management capabilities
• 56% of respondents expect a moderate increase
(<20%) of investment in risk management capabilities
in the next two years
• Only 12% reported no change
Actions to Consider
• Consider recruiting specialist skills from non-traditional
recruiting pools, such as security specialists, strategic
planners and data analysts
• Invest in building cross-functional skills in existing risk
personnel
• Invest in digital technologies and analytics that can
drive insight from fewer professionals
2015 2013

26
Priority 4:
Quants/risk modelers 78
• Compared to two years ago, priorities among
insurance respondents are expected to shift to
business analysts, quants and risk modelers, and
cyber risk experts
• Data-driven specializations continue to be highly
sought after skills
• Business skills – from strategic planners to analysts –
also ranked highly
Actions to Consider
• Embed risk team members into assignments across
the business as a launching pad for their careers in risk
or business operations
• Assess the net benefits of bringing certain disciplines
into risk and assimilating them – the shift may be
difficult
• Invest in training to build additional skillsets among
existing risk professionals
Figure 12: The types of expertise recruited in the past two years, and the skills to be
recruited in the next two years
Past two years Next two years

1
22%
13%
2
16%
19%
3
31%
39%
4
18%
13%
5
23%
7%
27
Priority 5:
Cultivate a consistent, resilient and integrated risk culture
• 2015 study respondents across all financial services
sectors struggle with implementing an enterprise-wide
risk culture
• Only 7% of insurance respondents report a strong,
consistent culture and 22% report they are still at the
early stages of development
• Optimism is limited as only 23% believe they can have
a strong culture in two years time
Actions to Consider
• Rethink the organizational model so risk is embedded
within the business. This may mean going from a
centralized to a decentralized operating model.
• Include risk-based approaches in strategic decision-
making
• Staff risk personnel across businesses or include in
informal working groups
Figure 13: Statement that best describes the stage of maturity of the insurer’s risk culture
We are at the early
stages of developing
and implementing a
risk culture
We have made
improvements in
embedding our risk
culture, but we still
have work to do and
face barriers to its
full implementation
We have a strong and
consistent risk culture
that is understood and
implemented across the
entire organization
Today Two years’ time

To learn more about the study
and to obtain your copy of the
Insurance Report please go to:
www.accenture.com/insurance-
riskstudy2015

An evolving landscape

2005 2015VS
Decisions informed by past events
Risk only outlook
Focused on credit, market and operational
risk
Narrow definition of operational risk
Clear demarcation between three lines of
defense
“Left brain” – quantitative; analytical approach
Prioritized control and prevention
Tactical attitude: centered on day-to-day risks
Spreadsheet-based management
Digital? What’s digital?
Looking forward, with “next day” thinking
Recognizing risk AND inherent opportunity
Aware of a growing range of emerging risks
More comprehensive definition of operational risk
Three lines of defense, with fluid interaction embedded in the
business
“Left AND right brain” – creative, innovative understanding
A balance of control, prevention, and enablement
Strategic awareness: focused on long-term business
challenges
Increasingly integrated data sources
Emphasis on digital risks and opportunities
The Risk Landscape
Risk management in 2025
Analytics now permeates decision
making
Companies are exploring robotics and
artificial intelligence to manage
transactional risks
Behavior prediction helps to effectively
inform risk management
Rise of the Chief Risk and Return
Officer
Risk management is the career path to
the C-suite
Single data source drives reporting and
analytics activities
For more information, please visit: www.accenture.com/riskstudy2015 © 2015 Accenture. All rights reserved.

2015 Global Risk Management Study
Industry: Insurance
31
Disclaimer:
This presentation is intended for general informational purposes only and does not take into account the reader’s specific
circumstances, and may not reflect the most current developments. Accenture disclaims, to the fullest extent permitted by
applicable law, any and all liability for the accuracy and completeness of the information in this presentation and for any
acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit, or tax
advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professionals.
About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 323,000
people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across
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net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com.
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