The CRO Forum is an association aimed to advance risk management practices in the insurance industry. Their focus is on identifying best practices in risk management and regulatory requirements and providing insights on emerging and long-term risks. The members of the CRO Forum are large multinational insurance companies represented by their Group Chief Risks Officers. Recently, the CRO Forum published the Emerging Risk Radar 2021 update, an annual publication which provides insight in the emerging risks and associated major trends expected to impact the insurance industry over the next five years and beyond.
Many will agree that it is no surprise that risks such as pandemics, extreme weather and cyber threats remain in the high risk category with significant impacts already seen in insurance claims. In the Risk Radar 2021 update, also biodiversity, social-economical inequalities and mental health risks have been identified as emerging risks worthy to note. In the Radar, these new emerging risks have been classified as medium risks with a potential significant impact on insurance claims expected in the next one to five years. Moreover, potentially the most noteworthy addition to the 2021 Radar is the emergence of ESG (environmental, social and governance) issues as a new major trend in the insurance industry. Pressure is building for insurers to take action, whether through regulatory pressure with the renewed Sustainable Finance Strategy recently published by the European Commission, or through stakeholder pressure with shareholders and customers demanding from insurers to not only manage their ESG risks but also actively contribute to a sustainable economy.
It goes without saying that insurers and CROs have their work cut out for them. Have you, as an insurer, already reflected on these trends and considered the impact on your business in the short, medium and long term?
At KPMG we support our insurance and pension clients in understanding the impact of these emerging risks on their business. Together we find the solutions for not only managing these risks appropriately, but also to take advantage of the associated opportunities.