July 13, 2020
A recent survey of European risk managers reveals that many risk management trends, such as digital transformation and the use of captive insurance, may be accelerated by the COVID-19 pandemic. The survey findings were disclosed in
Captive Insurance News
on July 8.
Highlights from the 2020 European Risk Manager Report include:
Risk Landscape
Digital risks continue to be the most significant threats to business in the short (12 months) and medium-term (3 years). Cyber threats are the number one risk in both time frames, and data theft and fraud are growing in importance and stand at number four in the short term.
Uncertain economic growth appears as the number two threat short term (12 months) and number three medium term (3 years).
Risks related to sustainability are two of the top three risks in the long term (10 years) with climate-change and environment damage the number one risk and extreme weather events number three.
Insurance
A hardening insurance market is an issue for risk managers. The report shows:
- 90% are concerned about limitations and exclusions for emerging/specific risks.
- 88% are concerned about changes in market conditions.
- 68% are concerned about concentration in the insurance market.
One consequence is renewed interest in captives with 43% of risk managers considering this option compared to 15% in 2018. Twenty-seven percent of risk managers say they will use an existing captive for hard to place risks compared to 1% in the 2018 survey. Sixteen percent of risk managers plan to create a new (re)insurance captive compared to 14% in 2018.
The Risk Management Profession
The strategic role continues to grow:
- 60% of risk managers assess risks related to the different strategies considered by their organization during its strategy definition (2018 – 47%) and 59% assess risks related to the non-alignment of the organization’s strategy with its mission, vision and core values and core values (2018 – 41%).
- 67% of the risk managers use innovative technologies in their activities: data analysis, data visualization, process automation and/or artificial intelligence.
More than half the risk managers work closely with IT and information security on cyber risks or have it within their team. More than one-third of risk managers are directly involved in the management of risks related to the adoption of new technologies by their organization. 40% of survey respondents say they are already playing or are planning to play a specific role regarding environmental, social and governance related (ESG) risks.
Stay safe,
Rich Higgins, CPA
Managing Principal - New Jersey Office
McCarthy & Company
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
