Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • August 2020
General Features

Risk: a clean sheet

Open-access content Wednesday 5th August 2020
Authors
JULIAN KIRKMAN-PAGE

Julian Kirkman-Page reflects on how risk managers can offer value to their businesses in a volatile era

web_p40_00020558-©Ikon-.png

The nature of business risk is going through a dramatic revolution and, at the heart of it, the role of the risk manager is changing profoundly. With the world becoming more connected, both strategic decision-makers and risk managers must embrace exposure in its broadest sense – by taking into account an enterprise’s entire business network when assessing an organisation’s business risk, from key suppliers to key customers.

Every corporate risk register, or what we call ‘corporate risk stack’, includes not only traditional risks (such as health and safety) but also more intangible risks, such as reputation and cyber. It is these risks that trouble risk managers – they cannot be controlled or mitigated effectively, partly because they can be impacted by external events.

The current coronavirus outbreak is the most obvious example of an event that can impact and disrupt an enterprise’s business network. The reaction and disruption from the outbreak is causing supply chain delays that are affecting both businesses and households – from a shortage of components for manufacturing to a shortage of hand sanitiser. It is no surprise that business interruption and contingent business interruption are at the forefront of many risk managers’ minds.

Insuring the uninsurable

Many corporates maintain operational or enterprise risk management departments that focus on internal controls, governance and meeting regulatory requirements. Some corporates may also maintain a separate insurance department to focus on statutory requirements, such as employment liability and third-party motor, in order to protect the physical assets of the company.  

However, more enlightened risk departments are realising that there is business potential in merging these risk and insurance functions to assess how previously uninsured or even uninsurable risks – what we call ‘insuring the uninsurable’ – can be transferred off the balance sheet. This frees up balance sheet resources to target new business opportunities.

The key element underpinning any such opportunity is access to data. No (re)insurer or financial company is going to underwrite any amount of risk that cannot be quantified. In this brave new world of risk transfer, though, the (re)insurance community needs to think outside the box. Rather than offering distinct product silos – say a cyber policy – to corporates, they need to offer a holistic solution that meets the corporate’s business needs.

If (re)insurers continue down their current path of shoe-horning risk into a collection of policies that do not match a company’s business, risk managers may be forced to turn to other alternative methods of risk exchange, such as captives.

It is by ‘insuring the uninsurable’ that risk managers can not only quantify previously uninsurable risks such as reputation but also help to free up the balance sheets for their organisations. A move that would allow the organisation to maximise their opportunities and expand their business.

Julian Kirkman-Page is a consultant and principal at Russell Group

 

Picture Credit | IKON
Actuary Banner august6.png
This article appeared in our August 2020 issue of The Actuary.
Click here to view this issue
Filed in
General Features
Topics
Risk & ERM
General Insurance

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Calling all GI Actuaries looking to move into contracting

England, London
£700 - £1000 per day
Reference
146169

A chance to gain capital modelling experience.

London, England
£70000 - £110000 per annum
Reference
146168

Capital Contractor GI

England, London
£700 - £1000 per day
Reference
146166
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ