Digital transformation is changing every aspect of the business landscape at an exponential pace, bringing the full force of innovation and disruption to all sectors and markets says Allied World’s senior vice president, Hong Kong country manager & head of general casualty, Asia Pacific, Jotu Shohtoku.
While there are vast opportunities, these are matched by major challenges. Business leaders and senior executives are faced with difficult strategic decisions. Insurers too are being transformed by digital advances. As we position ourselves to respond to an evolving marketplace, we have witnessed several trends and strategic challenges that apply to all businesses in this new and digitally advanced environment. These include:
Customer demand and customisation
Businesses are trying to balance the need for greater customer service and product customisation. Consumers want simpler products, yet they also demand more bespoke products that match their lifestyle needs. To bring these to fruition, consumers will need to share huge amounts of personal data. This means companies are under greater pressure to protect this data and comply with data protection regulation locally and abroad (such as the EU’s General Data Protection Regulation).
Digital routes vs. traditional distribution
There are now various distribution routes to market: online platforms, digital retail aggregators and mobile applications, for example. These sit alongside traditional distribution routes, and for some companies, the challenge is in how they diversify their routes to market, while not neglecting the benefits of traditional distribution.
From paper to digital
Some industries continue to produce an absurd amount of paper. How do companies digitalise their processes, and take advantage of the efficiencies and insights that digital technologies offer, while ensuring that the practice of turning paper to digital data complies with laws on document retention that may perhaps be outdated?
THE RISK MANAGER’S PERSPECTIVE
Risk vs. opportunities
Risk managers play a crucial role in supporting senior executives in making these strategic decisions. Take the simple example of a new digital product. There are many risks linked to creating and launching a new product: regulatory compliance, licensing rules, data protection, reputational risk… the list goes on. What do risk managers need to do to ensure that they are protecting both the consumer and their company?
In addition, today’s risks are more complex; in this new digital environment, risks are more interconnected and the speed at which these risks evolve are increasing. How can risk managers show these interconnected webs to their managers?
Be part of the decision making
Then there is the question: do these risks fit a company’s risk appetite? What risks do risk managers absorb and what do they transfer? More than ever before, it is imperative that risk managers are part of their company’s digital transformation decision-making process so that they can add value to all strategic decisions rather than just being a disruption stopper.