All looking up – Régis de Poncins – Europe

Rodrigo Amaral (RA): What are the big three risks that face your organisation over the next twelve months and why are these regarded as top priority? Régis de Poncins (RP): The security of our staff is very important for us. We work in the African continent, which is always in perpetual change, especially in recent times. Credit risks also are important to manage. A third important risk is the potential for conflicts in certain countries, which can force us to reduce our presence there for a while or be at origin of damages on our assets. RA: Do CEOs take risk management seriously and understand the benefits or is it a tick box function? How can senior management be persuaded to ‘buy into’ the concept of enterprise-wide, dynamic risk management?hideRP: I would say that, because of pressure from events and, particularly in the case of listed companies, from financial markets, risk management begins to be taken more seriously than in the past. In some companies risk management may be even seen as an opportunity to create value already. But, in general, the development of risk management remains very much influenced by regulators, who will usually determine to what extent companies need to be more active with their risk management initiatives. RA: How can risk management be truly embedded within a global corporation? How can risk managers ensure that risk management is properly carried out at line manager level throughout a group and in overseas locations? RP: What is sure is that risk management is something companies are worried about today. But having an integral approach to risk management requires that the top management of the company embraces the process. And then it is necessary to have in place the channels of communication that will enable the process to trickle down to all the units of the company, both at home and abroad. RA: Would the creation of a globally recognised formal risk management qualification help convince senior management of the value of the function and raise the influence of the risk manager? RP: There already are some risk management qualifications and to have a global diploma to assess the qualification could even be a useful thing. But in my view it is the work experience that proves to be the most relevant factor for a risk manager. RA: Should a risk manager of a global corporation also be in charge of insurance management or should the two functions be clearly split? RP: Yes. Insurance is an important part of risk management. From the moment that we are talking about a coordinated risk management process, it is necessary that the insurance element be part of risk management. RA: Is corporate insurance currently good value for money? Where are the coverage gaps and what could and should the insurance market do to help make the uninsurable more insurable and affordable? What should risk and insurance managers do to help create new coverages? RP: As of today, I can say that the products offered by insurers are satisfactory. We are not seeing an insurance market that is disconnected from the cost of risks. Just the opposite. We can buy our coverages according to the true cost of the risk. In terms of capacity, we have not had any problems finding the coverages that we need in the market. There are of course some risks that we cannot transfer to the market because insurers do not offer coverage for them. For example, financial losses, or certain risks that are of a more immaterial nature. But we do not really have to confront this kind of risk in our daily work, so we do not feel a great need to buy such coverages. New risks are actually standard ones. We are not in the e-business, which is a risk that requires a new approach from insurers. We face risks that are largely known by the insurance market, so we do not face problems to transfer them to the market. RA: Are you happy with coverage offered for cross-border coverages such as global programmes? What could and should be done to provide you with a more consistent, compliant and cost-effective global programme? RP: As of today, we are mostly happy to transfer our risks via international programmes. They enable us to mutualise the risks and bring us advantages from an economic point of view. We can also set up guarantees for the whole of our subsidiaries, no matter where they are located. Maybe we could see improvements in the future in the field of compliance with local regulation, for example in tax matters. For us, one improvement would be that all premiums were charged directly by insurers to our local units, as a means to better manage tax risks. RA: Is it time to end the annual renewal process as it maintains a short-term, commoditised approach to the business of insurance? RP: I am not sure that it can be changed. The relationship between insurers and clients is a contractual one, comprising a beginning and an end to it. For that reason, it is necessary to discuss insurance contracts every year. Of course the best thing would be to have long-term contracts, but this would be difficult to achieve considering market conditions. From the moment where there is a contract between two parties, we have to talk about its renewal.

All looking up – Régis de Poncins – Europe

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