Sustainability underwriting needs more uniform approach, argue Portuguese risk managers

Insurers are increasingly taking sustainability measures into account during the underwriting process but there remains a lack of uniformity when it comes to information demands, according to a group of leading Portuguese risk managers. The result has been more red tape for buyers, say the risk managers gathered for this year’s Risk Frontiers Europe survey. “Insurers are asking about ESG in their forms but it remains an erratic effort,” pointed out Jorge Neto, insurance manager at retail group Jerónimo Martins. “Why aren't there standard indicators for it? Different insurers ask different questions. The analysis of data, even if we are negotiating the same insurance line, may vary significantly from one underwriter to another. It creates a lot of pressure and extra work for the client to renew or seek solutions. It is quite important to put in place an ESG standard for the insurance industry,” he argued. Participants in the Lisbon roundtable also believe that the ESG agenda will become a big issue for risk managers, not least because sustainable factors are becoming a key element in attracting talent. “The ESG trend creates both risks and opportunities. Risk managers must analyse, identify and mitigate the risks but also keep in mind that there is empirical evidence that ESG investments generate not only profits, but also reputational benefits,” said André Rodrigues, who works at BNP Paribas in Portugal. “One example is employer branding. A new generation of professionals that are entering the labour market want to be sure they will be working in a company that is engaged with the fight against climate change, corruption and the like. The consolidation of an ESG structure is essential to generate trust in the organisation, and trust is vital for all companies,” he said. Attracting new blood is a subject dear to many risk management departments’ hearts. But not many professionals are available in the Portuguese market to do the job and it is hard to bring new graduates into the fold as the function is not well known or understood. “When I explain to my students what risk management actually is, I feel it dazzles them. On the other hand, it is hard to explain to my six-year-old son what I do in my work,” said Rodrigues, who teaches the subject at graduate level. But he added that risk management is highly attractive in a fast-evolving labour market. “In the future, the skill that will be the most valued are those with a generalist trait. Technologies such as artificial intelligence and machine learning will make it less necessary to have specific skills focused on a particular field, and we will have to grasp a little bit of everything,” he said. “If there is one function that enables one to have a general view of the company, of all its areas, it is risk management. Any new graduate who wants to have a broad view of their company should have risk management as their main choice. But, for that to happen, the function of risk manager needs to be better explained,” he added. This message needs to be transmitted to young people who are entering the labour market. “A young professional who does not like boredom has a perfect field in risk management. The same goes for a person who wants to have a global view of the company, and not of only one part of it,” said Tiago Antunes, head of risk management at Metropolitano de Lisboa, the public transportation company. “More than identifying risks, what we have to do is to show that risk management presents solutions and create opportunities,” added Pedro Cupertino de Miranda, the risk, cyber security and data protection officer at retail group Sonae.

Sustainability underwriting needs more uniform approach, argue Portuguese risk managers

ESG credentials must be used to attract youth in battle for talent

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