Cyber risk, ebola and regulatory change considered top emerging risks among UK insurers

Cyber risk is one of the Top Three priority risks for UK insurers in 2015

Cyber risk is one of the Top Three priority risks for UK insurers in 2015

Cyber risk, the prolonging of the ebola pandemic and more regulatory and legislative changes are the Top Three priority risks for UK insurers in 2015. That’s according to the findings of a new joint survey conducted by ORIC International and the Institute of Risk Management (IRM).

The survey not only identifies the top emerging risks but also examines both common and innovative emerging risk practices, asking for the considered and detailed views of ORIC International members (who make up over 70% of the UK’s insurance market) and the IRM’s insurance professional members.

The Top Ten emerging risks also include acts of terrorism, the impact of climate change, global political instability and technological advances.

Emerging risk was defined by those surveyed as newly developing risks with the potential to cause significant business impact that may not yet be sufficiently understood.

Caroline Coombe, CEO of ORIC International, believes that the identification and management of emerging risks must remain a priority for global insurers. “Only 55% of survey participants are currently reporting emerging risk at Board level despite there being considerable benefits to effective emerging risk management,” explained Coombe. “Companies must consider benefits including improved planning, awareness, competitive advantage, product innovation, better underwriting risk selection and enhanced pricing strategies.”

Coombe added: “ORIC International is currently working on developing Principles of Emerging Risk Management that will serve as a Best Practice guide for insurers and lead to greater consistency in emerging risk management. We’re also developing an Emerging Risk Database that will provide our members with access to benchmark information on emerging risks identified by peer firms.”

Board accountability on the increase

There’s good news within the survey’s findings in that both the insurance industry’s maturity of the emerging risk process and Board accountability has increased among insurers since 2013.

Caroline Coombe: CEO at ORIC International

Caroline Coombe: CEO at ORIC International

What hasn’t changed, though, is the perception of emerging risk as less important than other aspects of the Enterprise Risk Management framework. This rating has remained consistent over the past two years.

Alex Hindson, chief risk officer at Amlin AG and a member of the IRM’s Professional Standards and Certification Committee, said: “The survey indicates that the demand from customers for insurers to respond to this unmet need by offering cover across emerging risks has increased over the past two years. This lays down the challenge to insurers in terms of finding suitable solutions for their client’s ever-changing risk exposures. Of course, this will offer a source of differentiation and competitive advantage to those who are able to do so.”

The Top Ten emerging risks for insurers in the UK are as follows:

*Cyber risk

*Pandemic (ie Ebola)

*Further regulatory or legislative change

*Eurozone collapse/UK withdrawal from the EU

*Terrorist attack

*Significant changes in broker power/distribution chains/broker communities

*Shift in affluence to emerging markets (ie South East Asia)

*Climate change (including solar weather)

*Global political instability

*Technological advances

To receive a summary of the results from ORIC International and the Institute of Risk Management’s survey on Emerging Risk contact:

About the Operational Risk Consortium International (ORIC International)

ORIC International provides operational risk data and content solutions to its global membership base of leading insurance, reinsurance and asset management firms. As members of ORIC International, firms are better able to identify, assess, manage, measure, monitor and report on operational risk.

ORIC International is a not-for-profit organisation that facilitates the anonymised and confidential exchange of operational risk intelligence between member firms, in turn providing a diverse, high quality pool of quantitative and qualitative information on relevant operational risk exposures.

Further information is available online at:

About the Institute of Risk Management (IRM)

The IRM is a leading professional body for risk management. It’s an independent, not-for-profit organisation that champions excellence in managing risk to improve organisational performance by providing internationally recognised qualifications and training, publishing research and guidance and raising professional standards across the globe. Its members work in all industries, in all risk disciplines and across the public, private and not-for-profit sectors.

The IRM’s aims are to provide:

*Recognition: Provide internationally-recognised qualifications and courses for risk professionals throughout their careers

Knowledge: Promote the value of excellence in risk management to employers, regulators, Government and external stakeholders

Networking: Deliver virtual and face-to-face opportunities for the risk community to share information, experiences and learning

Career Support: Provide career-long support to help members develop their professional profile and improve their skills

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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