The 2014 RMIA Conference kicked off in Brisbane today with Swiss Re’s Steve Higginson discussing the latest insurance market developments and the risks that we will all face in coming years
Talking exclusively to StrategicRISK, Swiss Re Corporate Solution’s head of sales for Australia and New Zealand explained that his objective on day one of the three-day Risk Management Institution of Australasia (RMIA) event was to identify and expand upon some of the most pressing emerging risks faced by businesses across the region.
“I’m not proposing solutions for emerging risks and how they should be managed by business,” Higginson told SR.
“What I’m doing is identifying emerging risks and bringing into people’s minds both realised and unrealised risks.
“Emerging risk is by its very nature changing, evolving and developing, but you need to recognise risk and once you’ve done that you can try to find a way to deal with it.”
Higginson’s presentation on emerging risks followed his participation in the conference’s opening panel discussion on recent global insurance market developments, during which he shared the stage with Ross Castle of AJ Gallagher and Zurich’s Derek King.
More than 300 risk and insurance professionals witnessed the discussion held at the Brisbane Convention and Exhibition Centre.
Later in the day, a smaller audience joined Higginson’s presentation, one of five concurrent sessions, to hear his take on the future risks we should all be mindful of.
And there were plenty of them. From globalisation, distribution of wealth and virtual currencies, to cybercrime, phishing, malware and espionage, as well as medical developments, product tampering, generic clones and the use of antibiotics, Higginson covered some serious ground.
Furthermore, the former Willis man brought up big data (“People talk about big data, but I’m not too sure that everyone knows quite what it is”) and automation and robotics (“fascinating, especially with the mining emphasis here in Australia”).
He also had an interesting take on pandemics, listing ebola, polio, HIV, influenza and tuberculosis, among others, as diseases to watch. “With the free flow of the Australian mining space, there are potential impacts for the pandemic aspect with all these people flying in and out of various parts of the country,” he added.
Another topic covered was political risk (religious fundamentalism, new imperialism, regional and country financial stability, and capital adequacy), with China, North Korea, Russia/Ukraine, Libya, Egypt, the Middle East (ISIL), Fiji, Thailand, Ukraine, and even Scotland and Catalonia on Higginson’s radar.
Other emerging risks he highlighted included the world’s growing and ageing population, depletion of natural resources, genetic engineering, urbanisation and conurbanisation, pollution, waste management and solar storms.
Risk management maturity
The passionate nature of Higginson’s discourse would come as no surprise to those risk professionals who attended StrategicRISK Asia’s inaugural 2014 Strategic Risk Forum, held in Singapore in July.
During a panel debate on risk management maturity, he pointed to a significant business trend: that Asia’s industries are moving away from producing high-volume low-value, poor quality goods and services, to focusing on better quality products demanded by the growing middle class and those with new levels of disposable income, a key factor that will continue to encourage corporates to rethink and improve their risk management functions.
“Look at the white goods, motor vehicles, tyres, entertainment and hospitality industries: quality and reliability are paramount to their success,” he said.
“Ten to 20 years ago, China was producing a ‘lot of not very good’. Now, it is producing ‘less of much better’ and this trend is consistent across the region. This is an important move for many industries and has to be underpinned by a more robust risk management function.”
Higginson also urged delegates to engage the board.
“The word ‘management’ in ‘risk management’ is crucial,” he said.
“Firstly, if businesses are to expect their workforce to buy into and practise risk management, employees need to see senior executives proactively thinking about risk. Leadership by example is always the most effective way to get the workforce to believe and to engage and this is definitely true in the management of risk.
“Second, board members have to be fully engaged and involved in the risk management commitment, because without their buy-in you are not going to get the capital expenditure required to continually invest in management of risk in a constantly evolving business environment.
“Third, businesses need to have a conduit to their shareholders too – the people who provide the money. It is essential to have a way of convincing them to see the value to their financial interest from investing in risk management. The board will be responsible for ensuring the message is delivered effectively and it can only do this if it is fully involved and has a complete understanding of the risk management approach.”