As economic uncertainty lingers, insurance companies are using risk management to address threats that may have been overlooked in bull markets of the past. As a result, there has been an increase in appreciation of the discipline and, in particular, chief risk officers.
Ernst & Young’s latest survey of insurance industry CROs reports that 50% saw the size of their departments increase in 2012, some by as much as 30%. Although more CROs report to the CFO, 25% are now reporting to the CEO, and 65% have access to the board or one of its committees, such as the ERM, audit or risk committee.
These CROs are addressing a wide range of risks, but it should come as no surprise that economic capital issues top their list of concerns. Almost one-third (30%) cited their economic capital program as one of their most important accomplishments of 2012, and 25% expected that this will be a top priority for the rest of the year.
Overall, 45% of surveyed insurance company CROs cited low interest rates and economic conditions as the two biggest challenges facing the insurance industry today, followed by embedding risk into business management processes, regulation and accounting changes, and emerging risks.