Good Risk Management


As we cross into the second quarter of 2023, it’s clear that the insurance industry will be facing a series of both challenges and opportunities in the near future. Thoughtful business planning is going to be required to identify the strategies needed to navigate a period of economic uncertainty, demographic shifts, and technological transformation that can at times be dizzying in its complexity.

Getting it right, and allocating finite technology resources accordingly, can produce outsized benefits. Getting it wrong can lead to suboptimal results, resource challenges, brand damage…and worse. Another reality of today is that companies make decisions in a world of remarkable transparency. Twitter threads and other media messages can take on a life of their own, which can be surprisingly difficult to manage. 

Of course, insurance companies are in the risk management business. Every risk has a price. Carriers need to understand this, and they need to put themselves in a position to effectively match invested assets and liabilities. Looking toward the future, some risks carriers take on will be clearly known. As products and consumers shift, care needs to be taken to ensure that risk models remain appropriate and effective.

For property/casualty companies, changes in storm strength and duration may necessitate rapid adjustment to deal with unexpected levels of damage from hurricanes, for example. For life carriers, the events of 9/11 exposed a “vertical” concentration risk that few had previously considered. More recently, the pandemic’s outsized impact on certain demographic groups clearly caught some carriers flat-footed.

In recent weeks, we have watched as a series of banks floundered in the market, based at least in part on their inability to effectively manage risks in their business models and investment portfolios. Concentrations in certain geographies, or certain customer segments, don’t necessarily seem unduly risky until they are, it turns out, across all elements of financial services.

Addressing all of this concurrently seems like a large linear algebra problem. One of the ways to help with this is through our upcoming Aite-Novarica Group Insurance CIO Council Meeting. In addition to an opportunity to be introduced to an array of our new research, this is also a remarkable opportunity for networking and information exchange. Almost 100 senior leaders from insurance carriers across North America have already registered for this truly unique event. Request an invitation for this May 1-3 event here.

We live in interesting times. Now is a great time to make the most of it!