Anupam Sahay looks back on his first 14 months at the Marsh-owned international management-consulting firm, and argues that risk appetite must move further into the fabric of Asia’s everyday decision making

Sahay joined Oliver Wyman as a partner and head of the firm’s insurance practice in the Asia-Pacific region in May 2013.

The former head of Aviva’s pan-Asian business had a clear remit – to build out Oliver Wyman’s financial services consulting practice in the region.

With that process now well and truly under way, Sahay told StrategicRISK it had been a “fantastic and vibrant first year”.

“We’re now in the privileged position of advising leading insurers in China, Japan, Hong Kong, South Korea and Australia,” he said.

“It’s an earlier stage practice than some others at Oliver Wyman so we’re growing fast and our work is spread about 70% life insurance and 30% general insurance.”

The Indian-born qualified engineer, who has worked across financial services in the UK, US, mainland Europe and Australia, noted that the amount of structural reform occurring across Asia at present was “tremendous”.

“Between 2014 and 2019, pretty much every single major government in Asia is overhauling their financial systems,” he said.

“Indonesia and Singapore, for example; both this year. I think that’s a huge driver of change for us and, more importantly, for consumers across Asia.”

Oliver Wyman was heavily involved in C-ROSS [the China Risk Oriented Solvency System], Sahay added.

“It’s the Chinese version of Solvency II with Chinese characteristics; it’s a complete overhaul of the system,” he said.

“We aim to be a counterpart to the CIRC [China Insurance Regulatory Commission] and, more importantly, the companies themselves, both mainland Chinese… and also the foreigners looking in.”

Evolutionary battle

Governance was an “evolutionary battle” for all multinational carriers, Sahay said, which involved working out how to balance growth with intelligent risk taking and capital allocation.

Risk-based capital was “being improved and used across the region in many countries”, he said, adding that much of his recent work involved helping to upgrade the risk and capital management of both multinational companies expanding across Asia and Asian companies spreading out across the region.

“For example, with the European companies coming in, they need to work within the Solvency II framework, but the individual jurisdictions in Asia may or may not be heading in direction,” he said.

“And for the Japanese expanding into South-East Asia or China; it’s a very different ball game than they are experiencing at home.

Singapore-based Sahay said that while there are many different dimensions to risk appetite, “oddly enough in Asia what we’re finding is the foundation stone of risk appetite that informs decision making is the one that is the least plumbed aspect of risk and capital management”.

“Some of the technical aspects need to evolve and often they are there but slightly hidden in a box in the corner, as opposed to helping with core decision making at an executive or board level,” he said.

“So our approach to it is to bring our technical firepower into the business domain in terms of risk appetite… and indeed move that into the fabric of everyday decision making, as opposed to it remaining a purely technical function.”

Three units

Sahay said that Oliver Wyman was in the process of introducing the “three-manager model” to Asia.

“At its heart it says that, in many organisations that we work with, there’s liability and asset management, but the strategic balance sheet management in terms of risk appetite, risk policy, capital allocation, economic capital and risk investment measures tends to fall between the cracks of finance, risk and the actuaries.

“So we work with the three-manager model that says that clearly there ought to be three units; specifically, a liability unit, an asset unit and then a strategic balance sheet unit that formally builds in the processes and discipline.”