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The risk function of the future

Insurance Risk AI

In this report, we present a blueprint for the risk function of the future – a team that fuses the power of automation, analytics and AI with human judgement and strong relationships across the business. We consider the megatrends reshaping the risk landscape and how the risk function can help firms rise to the challenge.

Helping risk teams evolve and navigate the changing risk landscape

The risk landscape is changing faster than ever. Insurers are at the forefront of helping their policyholders manage risk. Therefore, it is critical that insurers adapt and evolve their own approach to managing risk in an increasingly interconnected, fast moving and volatile world.

We have discussed this topic with over 50 CROs, senior risk managers and board members from insurers across the London Market, the UK personal and commercial lines market and international markets.

This report distils the wisdom from this research into actionable insight for you – a blueprint for how you can ensure your risk team rises to meet the challenge.

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Key highlights:

  • Top risks today: Our participants rated cyber risk, climate change and macro-economic uncertainty as their top risks today.
  • Megatrends in risk: CROs raised a wide variety of risks that could manifest over the coming decade. From these we distilled five key megatrends that capture the majority of these challenges: AI, climate change, geopolitics, society and culture, and interconnectedness.
  • State of the union: CROs rated their business-as-usual processes such as KRI dashboards and the ORSA as strongest. Key areas for improvement were the emerging risk process and the risk function’s role in supporting strategy.
  • Risk management engine: We see the risk function of the future being powered by a risk management engine. This will be AI powered, allowing for an expansion of the data and metrics that the risk team can review, monitoring of KRIs in real time, and business feedback via bespoke dashboards. Automation of routine risk management work will allow the risk team to spend more time partnering with the business.
  • The strategic CRO: We see a clear need for the risk function to strengthen the link between risk and business strategy and ensure that the mindset is “how can we help”, not “how can we stop”. Central to this is the strategic CRO – who is included in the strategic decision‐making process from an early stage and has genuine ability to influence the strategy of the firm.
  • Blueprint for the risk function of the future: We bring together all of these concepts in a blueprint that you can use to set the future course of your own risk function.