And what a year it has been…

So what have we learned in a year? Back at the beginning of our journey, we were told that the Asian risk management market lacks the sophistication of more established markets. Dedicated risk and insurance managers were few and far between. Instead, insurance was entrusted to heads of procurement who were buying stationery one day and directors’ and officers’ coverage the next. Or else, it was the job of the chief finance officer. In both cases, the purchasing was primarily based on price.

However, while there is undoubtedly some truth to this, especially for domestic-based companies, the research we have carried out reveals a growing expertise among Asian risk managers and an approach to the use of insurance in line with their counterparts in other regions.

For example, roughly half of the risk managers employ captives and global programmes or are planning to in the near future. Those that do not are either too small or too domestically focused to gain any benefit in their advantage.

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But there is still a need for risk management to develop further in the region and for managers to work more closely with the insurance sector to effectively manage their existing coverage, and develop new solutions for new and emerging risks.

We asked risk managers to identify one new insurance solution they would like to see. The majority selected cyber risk, despite the fact most insurers have a cyber risk product – the inference being that these existing products are not currently good enough.

The typical criticism of insurers is that they move too slowly and are unable to adapt their commoditised products to match the changing risk landscape. Yes, progress has been made in several areas, such as the use of parametrics to create personalised nat cat insurance, but weather – even with the effects of climate change – is relatively predictable and easy to measure.

Humans however, are less predictable, particularly when it comes to politics. After all, Donald Trump has just become US president-elect.

One risk manager selected ‘Trump factor liability’ on his wishlist for new insurance products – a policy that could somehow provide protection for unexpected geopolitical risks, from Brexit to Trump.

As impractical as this product might be, it is crucial that risk managers and insurers continue to explore new ways to manage an ever-changing risk landscape, because who knows what events may be unfolding this time next year.