From Regulatory-driven Risk Operating Models to Improved ECM and Client Centricity

Efficiency and Innovation: From Regulatory-driven Risk
Operating Models to Improved ECM and Client Centricity
Eric Jeanne and Markus Salchegger
Accenture Finance & Risk Services
RiskMinds Insurance 2016
Amsterdam, March 23rd 2016

Agenda
Technology drivers that require
new thinking around efficiency
and innovation for Chief Risk
Officers and Actuaries
Risk management to be applied
beyond current corporate areas
to help improve Economic
Capital Management (ECM)
and increase client centricity
Conclusion:
Technology Vision 2016 –
Emerging trends for Insurers
Copyright © 2016 Accenture All rights reserved. 2

3
Insurers are facing increasing constraints in Finance, Risk and
Regulatory areas, pushing them to rethink operating models
High level challenges and trends in the insurance industry
Copyright © 2016 Accenture All rights reserved.
Regulatory Pressure
• Increasing transparency
• Growing financial/reporting standards
• Rising complexity
Economic Pressure
• Continuous low rates environment
• Market pressure on financial results
• Decreasing amounts of free/available “Own funds”
Cost Pressure
• Operational efficiency
• Cost reductions
• Value-adding services
New Technologies
• Technological innovations
(Big Data, Internet of Things,
Analytics)
• Standardization and automation
• Data analytics
NEW
OPERATING
MODEL

4
Disruptive technologies for efficiency and innovation
Digital is impacting the Finance and Risk operating models
Organization Processes
ITData
Blockchain Big Data/Analytics
Cloud Cyber
New vision
Working processes
Digital risk-awareness
New skills
Agile methodologies
Data-driven decisions
Disruptive technologies have placed Finance
and Risk functions in a state of digital culture
shock, facilitating the use of more technology
by their people to perform more, thus gaining a
decisive advantage by creating a thriving digital
corporate culture
Robotics

Robust monitoring and reduction
of cost of capital
Mini-bots “phantom FTE”
automation of tasks and activities
5
Robotics and Blockchain technology is starting to play a significant
role in companies’ automation strategy
Help insurers become more efficient and eliminate unnecessary intermediaries
Robotic process automation
with focus on repetitive and
rule-based processes
Cognitive computing – adaptive,
interactive technology with
”learning“ capabilities
Digital/virtual assistance –
computer-generated conversations,
question answering...
Automation of regulatory reporting
and enhanced time efficiency for
financial instruments settlement
Improved security and transparency
of data and information
Secure transaction ledger database to
reduce the overall number of
applications and IT infrastructure costs
Organization
Processes
IT
Data
BLOCKCHAINROBOTICS

6
Navigating Finance and Risk IT operations efficiency to
realize the flexibility and control to drive agility
The new data and IT landscape for the insurance industry
Organization
Processes
IT
Data
Shared services
initiative
Data-based
decisions
Reduced processing
costs
Agile data visualization
and leveraging
unstructured data
Large scale
machine learning
Multi-enterprise resource
planning (ERP)
rationalization
Mobile
enablement
Infrastructure investment
avoidance
Risk reduction strategy
1st line-of-defense controls,
countermeasures and protections
Risk awareness, modeling
and simulations
Cyber resilience and
data protection
Detection, identification
and operational monitoring
BIG DATA/
ANALYTICS
CLOUD
COMPUTING
CYBER

Agenda
Conclusion:

8
The evolution of Risk Management will play an important role
in transforming operating models for improved client centricity
The evolution of Risk Management typically follows waves
RiskManagementEvolutionStages
Time
1. Cross-functional
Adoptions
Adopted in selected,
closely related
corporate functions
such as Finance
and Accounting
2. Group-wide
Centralization
Central provision of
RM methods,
technology and data
for company-wide
usage in core
insurance domains
3. Next Generation
Risk Management
Improved client
centricity with
new touch points
and self service

9
ECM has integrated capital management framework for strategy
setting, capital allocation, balance sheet and risk management
Example of ECM use to facilitate improved capital allocation
Enhanced Underwriting
to generate top-line
growth
Improved Capital Management
to strengthen profitability across
the company/group
Robust balance
sheet and higher
cash generation
+ =
OBJECTIVES
IMPLEMENTATION IN FINANCE AND RISK
ECM BENEFITS
Insight on capital
performance and
enhanced capitalization
Provides opportunity to
pre-empt emerging
regulatory requirements
Transparency of highest value creating activities
to support planning, pricing, reserving, steering
and strategic decision making
Capital Adequacy
Risk Management
• Owner of ECM, methodology,
calibration
• ECM output for external
prudential reporting
Capital Allocation and Steering
Financial Planning/Accounting
• Scenario analysis to strengthen
risk-adjusted returns
• Consistent treatment of ECM output
across the group
• Facilitate decision making on M&A
opportunities
ENHANCEMENT
SCENARIOS
CAPACITY

10
The dynamic of competing for capital within groups and divisions
should tremendously change in the future
Capital allocation is of greatest importance to insurance groups
Across insurance groups a consolidated group-wide risk vision aligned to
global capital requirements is recommended using an enhanced capital
allocation process
The “new” capital allocation process should be implemented at the following
organizational levels
Through the definition of
one/multiple common solvency
strategic indicator(s) (reflecting
group-risk appetite) and which
ought to be evaluated by
management at each strategic
decision point
Through an adequate risk limit
management process aligned to
the company’s global solvency
indicator
Steering Level
Line of Business/Geography/
Business Unit Level
KEY SOLUTION ELEMENTS
• Usage of prospective
tools/methods allowing easy,
rapid and accurate capital
requirement calculation in line
with regulatory framework
• Ability to control risk limits at
multiple levels of detail
(portfolio, business unit,
geography, risk module, etc.)
with sensitivities conducted
based upon market trends and
investments choices
THE CHALLENGE

11
Scenario-driven capital allocation approach can generate value in
comparison to traditional approach
Example of capital excess allocation: scenario-driven approach
Division IV
ECM
Group
ECM
Division I Division II Division III
Motor Property Marine
ECM
25m 25m 25m 25m
15m 5m 5m
ECM ECM
CHARACTERISTICS
• Capital steering is driven by top-down analysis from the group
• Capital is allocated to each division
• Divisions subsequently allocate capital to different lines of business
• All divisions have ECM modules that are centrally maintained and
locally parameterized
• ECM across divisions characterized by different levels of sophistication
• Capital is allocated on an annual basis as part of the planning process
CHARACTERISTICS
• All divisions and the group use the same ECM module
• Capital can be re-allocated on an ad hoc basis using ECM output
• In this example, dynamic scenario analysis detects the “Motor business in
Division II” has plateaued => 5m is subsequently re-allocated to group level
• Conversely, Division IV requires more capital than forecasted and needs to
increase capital (e.g. to support additional risks)
• Group can then allocate 5m excess capital to Division IV
Top-down Capital Steering Scenario-driven Capital Steering
Division IV
Group
ECM
Division I Division II Division III
Motor Property Marine
25m 25m 25m 25m
15m 5m 5m
ECM
5m5m
5m

12
Exemplary dimensions drive a comprehensive enterprise-wide
customer-centric strategy supported by Risk Management
Overview of Risk Management adoption on selected client-centric initiatives
Improved availability of
data per client (not only
per product) based on
Risk Management insight
Improved understanding
of the customer risk profile
and new demands
Increase effectiveness of
channels through improved
risk-based segmentation of
customer groups
New products/self-service
offerings based on new
customer risk demands
and/or profiles
Disruptive technologies allow insurers to place customers at the center of
the right activities, thus improving customer experience and satisfaction
Unique Customer
View
Customer
Analytics
Campaign
Management
Customer-oriented
Products and Services

Agenda
Conclusion:

14
The Accenture Technology Vision 2016 outlines key trends that
also drive future Finance and Risk Architectures
Selected Trends – Accenture Technology Vision 2016
Do things differently, do
different things and
create new jobs, products
and services
Machines will be the
newest recruits
IT barriers have been
eliminated
Looking to digital
ecosystems for the
next waves of change
PEOPLE FIRST: The Primacy of People in a Digital Age
Predictable
Disruption
Platforms are trending,
and for great reasons.
New business models are
adaptable, scalable and
interconnected
Platform
Economy
Intelligent
Automation
New technologies require
new talents. Liquidity
takes on new meaning
in the work-force:
become adaptable and
change-ready
Liquid
Workforce
Source: Accenture Technology Vision 2016: https://www.accenture.com/us-en/insight-technology-trends-2016.aspx

15
Insurers are in the midst of a digital revolution that is impacting
most, if not all, aspects of their business
To position themselves for success, insurers are encouraged to seize the
opportunities created by emerging trends
Business model
innovation
Platform
Economy
Upgrade business
processes
Intelligent
Automation
Enhance organizational
efficiency
Liquid
Workforce
Long-term
R&D strategy
Predictable
Disruption
Pre-emptive
risk mitigation
Digital
Trust
of surveyed insurers
see the “Internet of
Things” bringing
about complete
transformation or
significant change
in the industry
believe trust is the
cornerstone of every
business in the
digital economy
expect platform-based
business models to
become part of their
growth strategy in
three years
agree that a more
fluid workforce will
improve innovation
are investing more in
embedded artificial
intelligence solutions
78% 83%82% 83% 85%
PEOPLE FIRST
Source: Accenture Technology Vision 2016: https://www.accenture.com/pt-en/insight-insurance-technology-vision-2016

16
Efficiency and Innovation: From Regulatory-driven Risk
Operating Models to Improved ECM and Client Centricity
Disclaimer
This presentation is intended for general informational purposes only and does not take into account the reader’s
specific circumstances, and may not reflect the most current developments. Accenture disclaims, to the fullest
extent permitted by applicable law, any and all liability for the accuracy and completeness of the information in
this presentation and for any acts or omissions made based on such information. Accenture does not provide legal,
regulatory, audit, or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or
other licensed professionals.
About Accenture
Accenture is a leading global professional services company, providing a broad range of services and solutions in
strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills
across more than 40 industries and all business functions — underpinned by the world’s largest delivery network —
Accenture works at the intersection of business and technology to help clients improve their performance and
create sustainable value for their stakeholders. With more than 373,000 people serving clients in more than 120
countries, Accenture drives innovation to improve the way the world works and lives.
Visit us at www.accenture.com
Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

From Regulatory-driven Risk Operating Models to Improved ECM and Client Centricity

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (20)

Andere mochten auch

Andere mochten auch (20)

Ähnlich wie From Regulatory-driven Risk Operating Models to Improved ECM and Client Centricity

Ähnlich wie From Regulatory-driven Risk Operating Models to Improved ECM and Client Centricity (20)

Mehr von accenture

Mehr von accenture (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

From Regulatory-driven Risk Operating Models to Improved ECM and Client Centricity