The Covid-19 pandemic has raised the profile of European risk and insurance management, according to a new Ferma survey. But while the majority of respondents feel their organisations are well equipped to manage resilience, the results suggest more work is needed to make this issue a true strategic priority and improve crisis management.
The survey by the European risk management federation and McKinsey reveals that 90% of risk professionals polled feel the pandemic has made risk and insurance more important to their organisations. Some 16% said it has increased the importance to a great extent, 39% to a considerable extent and 36% to some extent. The remaining 10% don’t think Covid-19 has boosted their profession’s standing.
The results also show that the coronavirus pandemic accelerated the push for corporate resilience, but in varying degrees across sectors and resilience pillars.
More than 60% of the participants acknowledged resilience as a top priority or very relevant in strategic decision-making. And 57% feel their organisations are well equipped to manage resilience. Only 10% rated their company’s capabilities to manage resilience as poor.
Most participants identified the executive team and the risk function as chiefly responsible for resilience and related coordination within their organisations. This suggests that risk functions are taking a greater role in managing resilience more holistically, especially in coordinating with other functions, said Ferma.
More than half of those surveyed believe their organisations currently have effective capabilities to manage financial resilience, but there appears to be room for improvement around predicting events, conducting scenario analyses and stress-testing to assess potential outcomes, said Ferma. One quarter of respondents said they have no foresight capabilities currently.
Meanwhile, only one third of respondents said they have effective crisis-management capabilities in place. And looking forward, almost three quarters of the risk managers surveyed see a clear need to improve risk culture and more strongly integrate resilience in their organisations’ strategy.
Launching the survey and accompanying report, Ferma president Dirk Wegener said: “Before the pandemic, we knew that risk management and risk and insurance managers had an important role in keeping shocks from destabilising their companies. The pandemic proved that. Until this report, however, we had little data on that contribution.”
He said the pandemic has highlighted the importance of good risk and crisis management and its contribution to resilience. “But we must not be complacent,” he added.
“We continue to face other, potentially disruptive shocks, for example from climate change and cyber risks. Resilience is essential for the success of European business, and as this survey shows, in this, risk and insurance managers can be leaders,” said Mr Wegener.
He added that while the survey results show that the majority of European risk professionals believe their organisations are well equipped to manage resilience, “more can be done”.
“In particular, these results give the impression that there is work to be done on improving organisational risk culture, as well as making resilience more of a strategic priority,” said Mr Wegener.
“Risk and insurance managers are already involved in this process in a meaningful way. The findings give us a great incentive to maintain momentum. We must continue to underline our worth to our organisations. They also show us where we can take the initiative by developing in areas such as foresight capabilities and sustainability,” he added.