Corporate risk in an era of polycrisis  

As risk managers and their insurer and broker partners gather in Deauville, France for the annual AMRAE conference, Julien Guénot, regional manager for southern Europe at AXA XL, discusses the complex, evolving and often interconnected risks that corporate clients face and how the insurance market is working to help find new ways to manage, mitigate and transfer them.

We are living in an era of polycrisis. The turbulent geopolitical environment, macroeconomic challenges post-pandemic, the need to address climate change and transition to a greener economy, the opportunities and challenges posed by new and emerging technologies and innovation, and many more, mean that risk managers have an increasingly important role to play in their organisations. And the corporate risks insurance segment must step up to the plate and work with our clients as they navigate this dynamic environment.

As the recently published AXA Future Risks Report outlines, the risks our clients face today are often complex, evolving and interconnected. And these are not short-term challenges; the ability of companies to manage these risks and opportunities will be key to their long-term resilience and future performance.

For us to be able to work with our clients not only to understand the impact of these risks but to find appropriate solutions requires communication and collaboration. And this means that, as insurers of corporate risks, we need to adopt a new approach that puts greater emphasis on data insights, risk engineering expertise and prevention.

The importance of data and risk knowledge

To meet the new challenges our clients face, we have been focusing on the development of the way we use data and enhancing the sophistication of the risk management and engineering expertise that we have at our disposal.

For example, we tap into the knowledge of the AXA Climate team and the expertise of our more than 400 risk engineers in order to help our clients understand their risks, mitigate them and build resilience – for the longer term.

Essentially, we want to go on a journey with our clients. To enable their business to innovate – and for society more widely to adapt and move forward. For example, we want to help our clients to adapt to using green hydrogen or electric vehicles as part of their business model. If we can help them to mitigate the risks associated with these technological advancements then not only will they reap the benefits but society will be in a better place too.

Because there’s a lack of historical loss information here, we need to work to understand data and to build our knowledge and expertise by talking with clients and brokers to find solutions to emerging risks. This tripartite communication – between client, broker and insurer – is at the very heart of what corporate risks insurance is about. And in the face of today’s volatile risk environment, this collaboration has never been more necessary.

The state of the market

There are, broadly, three ‘buckets’ of corporate risk insurance solutions: fire, construction liability and financial lines; transportation – aviation, marine and space; and specialty risks, like political violence and terrorism, M&A risks, fine art and, of course, cyber.

For that first group of property-related risks, the insurance market proved itself relatively stable at the latest renewal. Pricing is now, for the most part, fairly well aligned with the new risk picture and the increased threat of losses from weather-related incidents, for example.

The transportation sector is in an interesting phase as clients seek to find ways to transition to a greener economy. This sector is vital to the economy – globally – and the insurance market is working hard to find ways to support these clients as they make changes to their business and, inevitably, their risk profiles change.

For specialty risks too, the risk profile of many clients is evolving and we want to find ways to work alongside them as they grapple with these challenges – and opportunities.

At AXA XL, we are emphasising our desire to work with clients, on a global basis, to accompany them as they grapple with the risks associated with cyberattacks or political risks, for example, as well as the need to transition to a lower carbon business model.

To do this, we want to foster and build relationships to support our clients over the long term as they retain more risk, for example. And our captive and global programmes capabilities will come to the fore here.

Risk management for the future

It is clear the risk management will play an increasingly important role for companies across all business sectors in the years to come. I commend the efforts that our clients are making to improve their own risk management practices and strategies. And we are working to support our risk manager clients by enhancing the risk mitigation and prevention services that we are able to offer them.

There are several new and interesting ways in which we are trying to do this.

For example, we have launched a Water Impact Sustainability Evaluation (WISE) tool to help our clients better understand their vulnerability to water-related stresses and to put into place ways to manage their water risks – whether those be operational, regulatory or reputational.

Our AXA Immersive Solutions tool enables clients to visualise and test certain risk scenarios, like flood or fire, and assess the efficacy of their risk prevention.

And we have also recently launched a wildfire risk prevention service for our clients in France, among other things.

Our Digital Commercial Platform allows us to interact with, and assist, our clients differently. It is a platform that enables us to develop services and roll them out, efficiently and simply, to our clients to enhance their experience, reinforce our offering and help them to enhance their sustainability.

As ever, the AMRAE conference will give us the opportunity to meet with our clients and other risk professionals to exchange ideas and forge partnerships to help businesses to tackle some of the challenges they face today and those they will face in the future.

We expect some lively discussions around the challenges of the green transition, the energy transition and today’s geopolitical turbulence, and the ways in which the insurance industry can support business and society. Captives will be a discussion point too, no doubt. These are part of our DNA at AXA XL. We are excited about the ways these tools, which have already proved their worth in helping clients to ride out market cycles, improve loss records and cover new, emerging or unusual risks, can show added value in helping clients to meet their ESG targets.

It will be an interesting and vibrant few days in Deauville. I look forward to talking to clients and partners there and to taking the knowledge and insights gleaned and using them to enhance our offering to our corporate risk clients as they innovate, adapt and evolve in this era of polycrisis and new opportunity.

Contributed by Julien Guénot, regional manager for southern Europe at AXA XL