Enterprise risk management gaining tractionReprints
While insurers value the advantages of their enterprise risk management systems, many say they have yet to complete their vision for a comprehensive system according to a new survey from Towers Watson & Co., the consultancy said in a statement Monday.
Towers' Eighth Biennial Global Enterprise Risk Management Survey showed that 76% of insurers consider risk appetite and risk tolerance statements highly important to their company's ultimate vision for its ERM program, a 15% increase from 2012.
The survey documented some progress, including an increase to 84% of respondents which have a documented risk appetite statement, compared to 74% in 2012 and 59% in 2010.
More than half of respondents (57%), however, also said they expect to make further changes to both their risk appetite and risk tolerance statements in the next two years, according to the survey.
The survey also found that while 95% of respondents said that relevant, robust and timely systems were either highly important (57%) or moderately important (38%), only half (49%) are more than halfway to completing their vision for the allowance of risk within business processes, while 39% are less than halfway toward completing their vision for economic capital calculation.
“Many insurers are comfortable articulating metrics for capital, liquidity and earnings at a very high level, but they almost immediately hit a steep uphill battle trying to figure out what it means for their business units and what it means to the front line in terms of setting limits, creating metrics they can monitor frequently and understanding how to actually achieve those metrics,” Mark Mennemeyer, senior consultant, Americas life insurance practice, said in the statement.
The survey included responses from 398 senior executives at major insurers around the world with more than two-thirds of the 398 respondents at C-suite level, according to Towers.
Life insurers were the largest group represented, comprising 43% of respondents, followed by property & casualty at 30%, multiline insurers at 13% and reinsurers (11%).