View this article online: https://www.insurancejournal.com/news/international/2010/09/29/113648.htm
“Risk management is now on the agenda for top management, the board and shareholders, which clearly support and sponsor the function,” states a bulletin from Federation of European Risk Management Associations (FERMA), released at its 2010 Risk Seminar, which opened in London today.
The survey is described as probably “the most representative ever survey of opinion on risk and insurance management in Europe.” It was conducted by AXA Corporate Solutions and Ernst & Young on behalf of FERMA.
782 people in companies and public organizations across 19 countries in Europe responded, a record number. This is the fifth such survey; it has taken place every other year from 2002, and each year the number of responses has risen. In 2008, there were 555 replies from 16 countries.
“The results for 2010 reveal continuing progress in risk management fundamentals but with significant disparities remaining from one company, country or risk management topic to another,” said the bulletin.
“For the insurance market, the message is a mixed one. There is reasonable satisfaction with current prices, but awareness of the possibility of higher prices as a result of market hardening and the effects of Solvency II. Respondents are particularly concerned about identifying new and emerging risks and look for support from insurers, especially for exposures currently considered ‘uninsurable'”.
The President of FERMA, Peter den Dekker, commented: “The record number of 782 replies that we have received this year gives the best available picture of the evolution of risk and insurance management and its role in Europe today. Thanks to our partnership with Ernst & Young and AXA Corporate Solutions over 10 years, FERMA has created a unique bank of knowledge that is available to our 20 member associations and to their members.”
The bulletin cited the following “key risk management findings:”
— Nearly half of the respondents (47 percent) said that the financial crisis had increased the standing of risk management.
— Risk management has high level sponsorship: the board of directors or supervisory board (25 percent), the CFO (24 percent) or CEO (17 percent).
— Compliance and legal requirements remain the main external triggers for risk management (70 percent), but shareholders’ requirements are increasing (39 percent compared to 35 percent in 2008).
— Shareholders and senior management take a close interest in risk management but with traditional expectations: minimizing operational surprises (70 percent) and managing cross-enterprise exposures (52 percent).
— Basic risk assessment methods are in place (66 percent use workshops), but quantification tools are still poorly used (22 percent at most).
— Company complexity has a clear impact on the maturity of risk management practices.
— Risk appetite is more closely correlated with risk category than the significance of the risk.
It also noted the following “key insurance findings:”
— Insurance buyers are comfortable with current pricing levels, but they are concerned about identification of future risks (61 percent), and that prices could go up because of market hardening (48 percent) and the effects of Solvency II (25 percent).
— Respondents are quite satisfied with insurers’ networks, knowledge and expertise but want them to be more innovative (52 percent). They’re looking for support on new and emerging risks particularly those which are currently “uninsurable” (57 percent).
— Respondents would like insurers to do more to share claims information and make it useful for their clients (47 percent).
— Production of insurance documents (46 percent master policies issued within one month of inception) and transparency of broker remuneration (55 percent yes) have improved, but issues remain.
To promote the involvement of the national risk management associations and widen participation, this year the questions were available in German, French, Italian, Polish and Spanish in addition to English.
For a rounded perspective on risk management in European organizations, FERMA and its partners also encouraged replies from people with an interest in risk in a wide range of business positions.
An independent survey organization, Toluna, managed the online questionnaire and provided the analysis.
The replies come from a broad range of industry and organization sectors across Europe. Respondents work mainly in large or very large companies, usually with international operations, sometimes very widespread. Two-thirds have a turnover of at least €1billion [$1.36 billion] per year; 13 percent have more than €25 billion[$34 billion]. Just under half employ over 10,000 people; 19 percent have more than 50,000 employees. More than half – 52 percent – are stock exchange listed.
Source: FERMA