FERMA Seminar - Frank Baron - The Asian Perspective

1. The Asian Perspective
Franck Baron
International SOS

2. Still A Dynamic Economy
1.5%
Projected 2012 GDP
Eurozone (Eurostat)
7%
Projected 2012 GDP
Asia-Pacific (IMF)
39%
of the wwde
economy in Asia-
Pacific by 2015

3. The Insurance Market:
The Growth is still there.

4. The Insurance Market:
turbulences and constraints
• 2011…a turbulent year for the insurance Economic Insured
industry: with a record year for Nat Cat. Losses Losses
• Much of the loss occurred in Asia Pacific. USD 435 USD 107 B.
B.
• Regulators continue to strengthen regulatory requirements.
• Increased Rating agencies’ influence.
• IFRS adoption or alignment in progress.
• Heightened focus on quantification of capital requirements:
Risk Based 2nd Generation Solvency II
Capital: Solvency equivalent:
Hong-Kong, Regime: China Japan
Thailand
EU’s transitional solvency equivalence scheme:
Australia, Hong-Kong and Singapore

5. 2012 Asia-Pacific
Risk Managers Survey
• A panel of 50 Risk-Managers.
• Voting session in Hong-Kong last week.
• 12 themes.
o Position in your company, Reporting and Sponsoring
o Top risks
o External factors and objective for Risk Management
o Coordination with other risk functions
o Risk Management and Internal Audit
o Extent of risk mapping
o Development of risk management activities
o Top issues and priorities regarding the Insurance Market
o Professional Recognition

6. What is your primary position within
your company?
1. President / Chairman
2%
2. Chief Executive Officer / Managing Director
8%
3. General / Company Secretary
0%
4. Chief Financial Officer
2%
5. Chief Risk Officer
0%
6. Risk Manager
22%
7. Insurance Manager
22%
8. Risk and Insurance Manager
18%
9. Head of Internal Audit
2%
10. Others
24%

7. To whom does Risk Management
report?
1. Board of Directors / Supervisory Board
16%
2. General / Company Secretary
2%
3. Chief Executive Officer / Managing Director
24%
4. Audit / Risk Committee
20%
5. General Counsel / Head of Legal
4%
6. Chief Financial Officer
22%
7. Chief Operation Officer
6%
8. Head of Treasury
0%
9. Head of Internal Audit
0%
10. No opinion / Don’t know
4%

8. Identify the top issue about the
insurance market?
1. Solvency II – potential impact on captives
0%
2. Solvency II – potential impact on availability of insurance capacity and cost
38%
3. Collective redress / class action
2%
4. Change in environmental regulations
2%
5. Increase in liability claims
12%
6. CAT NAT Claims
22%
7. Downgrading of insurance players
8%
8. Compliance
4%
9. Terrorism
2%
10. No opinion / Don’t know
10%

9. Which of the following key area should
insurers prioritize for improvement?
1. Capacity increase
4%
2. Tailor-made policy wording
20%
3. New insurance coverage products
11%
4. Expansion of territorial coverage
4%
5. Efficiency in claims settlement process
33%
6. Consistent compliance approach
2%
7. Design of global programme
11%
8. International reporting (premium and / or claims)
2%
9. Claims benchmarking / analysis
9%
10. Setting up of Service Level Agreement between insurer and client
4%

10. What is your TOP risk?
1. Planning and Execution
15%
2. Market Risks
21%
3. Competition, clients, partnerships
27%
4. Assets (Building / Equipment)
2%
5. Human Resources / Key people
13%
6. Supply chain / business continuity
8%
7. Compliance , legislations, policy
15%

11. What are the main external factors
triggering risk management in your
company?
1. Clear requirement from shareholders
20%
2. Catastrophic event, major crisis, reaction to unexpected losses
40%
3. Major insurance issues (cost, availability)
4%
4. Legal, regulatory and / or compliance requirements
31%
5. Analysts / rating agencies pressure
0%
6. Corporate social responsibility (CSR)
2%
7. Pressure from markets (e.g. competitors, suppliers etc)
2%
8. No opinion / Don’t know (exclusive answer)
0%

12. What is the main objective of your
company’s top management for risk
management?
1. Provide a reasonable assurance that major risks are identified, prioritized, managed
56%
2. Align risk appetite and strategy (integrate risk appetite within decision making)
21%
3. Secure investments / acquisitions / projects
2%
4. Enhance external reputation with investors and stakeholders
2%
5. Minimize operational surprises and losses
14%
6. Provide integrated responses for independent risks
0%
7. Rationalize capital and improve predictability of delivering business plans
2%
8. Decrease the cost of risk
2%
9. No opinion / Don’t know (exclusive answer)
0%

13. In your company, how well are the various risk
functions coordinated?
1. Full coordination
13%
2. Some coordination
69%
3. Totally working independently (“in silos”)
13%
4. No opinion / Don’t know
4%

14. What type of relationship is there between
risk management and internal audit?
1. Risk Management reports to Internal Audit
2%
2. Internal Audit reports to Risk Management
2%
3. Separate reporting lines
39%
4. A very close relationship (sharing of diagnostics, mutual influence)
14%
5. Coordination and cooperation on the audit plan
16%
6. Coordination and cooperation exist on a limited, informal basis
16%
7. There is no particular relationship
7%
8. No opinion / Don’t know
5%

15. In terms of being recognized as a
professional risk manager, what do you
think that risk managers should have?
1. Registration to a professional institute (as for lawyers, engineers, accountants)
25%
2. Professional qualifications (ARiMI, Institute of Risk Management etc.)
55%
3. Undergraduate degree in a risk based subject
5%
4. Post-graduate degree in risk based subject
7%
5. Others
5%
6. No opinion / Don’t know
5%

16. Thank You For Your Attention.
谢谢 ありがとう
ध यवाद
谢谢
ध यवाद 감사합니다
감사합니다
Terima kasih
ขอบคุ ณ
C m ơn b n