The big three for Ferma in 2013–lobbying, certification & Maastricht

Ferma set to raise profile in Brussels The first big item on Ferma’s plate this year is a more active approach to European affairs and lobbying on key matters that affect European risk managers. That’s according to Ferma’s president Jorge Luzzi, and its executive manager, Florence Bindelle, who also told Commercial Risk Europe that the federation wants to ensure national association are more involved in all Ferma decisions—in particular those taking positions on European rules. Arguably, representing the interests of the risk and insurance management community in Brussels is the main reason for the existence of Ferma. National associations such as Airmic in the UK, AMRAE in France and DVS in Germany are active politically at a national level and have scored some notable recent successes, particularly Airmic.hideBut the European Commission will not officially consult national interest groups. Thus if the pan-European risk and insurance management community wants its voice heard on European matters—such as the impact of Solvency II on the insurance market as a whole and captives in particular, the Environmental Liability Directive (ELD) and potential for mandatory pools or the remuneration of brokers—then it has to work through a European body such as Ferma. Ferma has done good work in this critical field in recent times, notably on Solvency II, broker remuneration and the extension of the competitive exemption for business insurance and the ELD. But Ferma has limited resources, the European political process is devilishly complex and of course it will never be easy to achieve consensus among all member associations. It is a big job that needs to be carried out professionally. Thus it should have come as no surprise to the European risk management community when Ferma recently revealed its plan to significantly raise its profile in Brussels through the appointment of Julien Bedhouche to fight Ferma members’ corner. Ferma said that Mr Bedhouche, a French national with a masters degree in European law from Rennes University in Brittany, will reinforce Ferma’s team in Brussels. He will play a key role in monitoring and assessing forthcoming risk and insurance management-related EU legislation and evaluation of the likely impact of such regulatory proposals on member activities. The Ferma insiders explained to CRE that during the federation’s December board meeting it was agreed that there were a number of very important topics, particularly linked to insurance, that need a lot of work and positive action to ensure the risk and insurance managers’ interest is promoted and protected. Mr Luzzi noted that representation at a European level is not just limited to insurance but also spreads to wider areas such as enterprise risk management and business continuity. This means that the potential political landscape is wide and that the full time team led by Pierre Sonigo and Ms Bindelle need help. Mr Luzzi was reluctant to go into more detail about what Mr Bedhouche will focus upon. He said that more details would be announced at the start of February, shortly before the AMRAE conference in Lyon. But the Ferma president did outline the overall intention of the new European affairs strategy. “We are working to try and maintain the pressure on all developments relating to risk management, insurance and risk financing and will be more involved at a European level in future. The new appointment will help to coordinate the various topics that need to be addressed,” he said. Ms Bindelle explained further: “We have to make sure that we align our discussions at European level with the discussions at national level. Even if there is a lot of work done and developments made in Brussels, we need to ensure our members around Europe join in and are part of the dialogue. They need to be closer to developments taking place in Brussels.” “That is why we hired a European affairs adviser to help us monitor the development and coordinate Ferma’s position with the members much more closely,” she added. The appointment of a European affairs adviser builds on the decision taken by Ferma several years ago to headquarter in Brussels to allow for a closer relationship with the European Commission, parliament and other bodies. Taking this further step into the corridors of power is critical argued Ms Bindelle. “There is a lot going on. You cannot miss the opportunities to attend the different meetings to influence discussion and put forward your views. There are meetings almost every week in Brussels and we are talking about someone who will be monitoring all different regulations. So we really had the need to internalise that monitoring because if you have good monitoring you can react at the appropriate time,” she said. A full time appointee with sole focus on this task will help, added Ms Bindelle. “In Brussels you can’t do everything on your own but you are part of a discussion network—and on each regulation you have your own network with other European stakeholders that are discussing the same issues and are positioning themselves more or less like you. You need to reinforce them in such cases or stand against them if you take a different point of view.” So Mr Bedhouche’s main duties will be to keep an eye on the different risk-related regulations and provide technical information that Ferma can share with members. He will help keep the risk management community up to date on important issues that could affect the profession and help it formulate positions and responses when needed. “In short, he is there to keep an eye on things and report to us and then make the case of Ferma and risk managers when we have decided what we want to say. And of course he will help formulate our response through advice,” explained Ferma’s executive manager. Mr Bedhouche gained experience in European affairs working as an assistant to a member of the European Parliament, he then became European affairs officer for the Belgian Banking Federation (FEBELFIN). On his appointment the Frenchman said: “I have had a great interest in European matters since I spent a year in Spain in 2006 as part of the EU educational exchange programme Erasmus, when I chose to study EU law. I really believe that the European project is a way for our nations to face a more and more competitive world. This new position is exciting and a step up for me. As a naturally enthusiastic person, I want to be a great addition to the Ferma team in Brussels.” Ferma to forge ahead with tricky certification project A key priority for Ferma this year is continued progression with its pan-European certification or accreditation scheme. Kicked off last year, the project aims to deliver a professional qualification that can augment existing national qualifications and provide individual risk managers with a proof of professional competence and practical experience that is recognised across Europe. Education is certainly a hot topic in the European and global risk management community currently following Ferma’s announcement at the recent meeting in Versailles that it would aim to have proposals for a pan-European certification for individuals ready to present to the general assembly at its forum this year in Maastricht. Jorge Luzzi, President of Ferma, was reluctant to give too many details or comment on the plan as he said he does not want to sway or influence the thinking and work of the committee that has been created to develop the proposals. This includes Julia Graham of DLA Piper in the UK, Michel Dennery of GDF Suez in France and Cristina Martinez of Campofrio in Spain. Ferma stirred up something of a hornet’s nest when it gave more details of the plans during the Versailles meeting as work on risk education is being carried out elsewhere in the world by risk management groups such as the Institute of Risk Management (IRM) based in the UK, RMIA in Australia and New Zealand, RIMS in the US and ALARYS in South America. There are also related initiatives brought by other groups such as the International Standards Organisation (ISO), the internal audit and business continuity professions. And of course universities such as Glasgow Caledonian and Nottingham in the UK each offer an established MSc in Risk Management, Leuven in Belgium now offers a Natural Risk Management course, INSA Toulouse in France will this year launch an MSc in Risk Engineering and the University of Aalborg in Denmark offers an MSc in Risk and Safety Management. To further complicate matters the Chartered Insurance Institute (CII) in the UK announced the launch this year of an MSc in Insurance and Risk Management in combination with Cass Business School which it said will explore the growing relationship between insurance, risk management and financial services. “Management of risk is now a key issue for all major businesses. Risk takes many forms: fluctuations in currencies, interest rates and commodity prices; threats to physical assets from earthquake, windstorm and other natural perils; man-made threats of terrorism, fraud and criminality. These are in addition to the host of operational and financial risks that surround all commercial enterprises,” explained the CII when it announced the new course. “This course will help you understand how to identify, control and finance risk by combining insurance programmes, hedging strategies and techniques such as Alternative Risk Transfer (ART),” it added. This new effort is not to be sniffed at. The CII has over 100,000 members and claims to be the world’s largest professional body dedicated to the insurance, savings and financial services sector. Cass claims to house Europe’s largest faculty in insurance, risk and actuarial science. Airmic is in discussions with the CII over the possibility of delivering chartered status for risk managers in the UK. Thus, if not thought through properly and handled carefully a new certification from Ferma could confuse matters for risk managers and spur damaging competition among the various interested bodies. This is presumably one of the reasons why Ferma announced in Versailles that it would talk to the IRM about the possibility of it running the course and IRM CEO Steve Fowler was at the event. Mr Luzzi thus again carefully chose his words on this topic but did stress that he and the Ferma board do believe there is certainly scope for an industry-led European certification project. “I respect and recognise the educational work carried out worldwide in Australia, Latin America, where ALARYS has a well-developed scheme, and of course the RIMS fellowship in the US. But I strongly believe that a certification project with a European flavour is necessary,” he said. “This is a very important project for the future. There is a lot of work to do and the team is working hard. But it is not up to me to prejudge what they decide. They will present their findings and ideas to the board and then it will hopefully be presented to the general assembly and thus gain the approval of all member associations. We are very enthusiastic about the idea,” he continued. The federation hopes the certification scheme will provide independent confirmation that holders of the accreditations have a high level of knowledge and experience in risk management. Ferma said that the aim of the plan is to put risk management on a similar standing to other professions such as law and accounting. Florence Bindelle, Ferma’s executive manager, explained that the scheme is part of the federation’s push to ensure that risk professionals gain the recognition they feel they deserve. Particularly as Ferma believes that although risk management is increasingly seen as important within organistions, risk managers are not necessarily gaining the same traction. “We see a contradictory developing phenomenon where risk management is more and more important and recognised within organisations but risk managers are not always. So the big challenge for Ferma and our members is to follow that spike in interest. Certification and the recognition that would come with that is therefore key, we believe, in this aim,” said Ms Bindelle. Ferma looks to forum and beyond in 2013 Ferma’s biennial forum is a huge focus this year for the federation as it will provide the European risk management community’s premier meeting place and of course provide the funds with which the federation operates for the following two years. The forum will be held in Maastricht, Netherlands from 29 September to 2 October. Its theme is ‘Inspire, educate and influence’. Jorge Luzzi, President of Ferma, is confident it will again be a success and even bigger than record-breaking Stockholm, not least because of expected energetic support from the Benelux risk associations that are traditionally some of the more active within Ferma. “I expect a very successful forum and it is growing each time. We have great support from the local associations in Belgium, Netherlands and Luxembourg. Maastricht is a great choice because it is in the Netherlands but is actually closer to Brussels than any major Dutch city. Luxembourg is a new member of Ferma so that is a positive too. The priorities this year will be to educate and influence,” explained Mr Luzzi. Registration for the event will likely open in April with Ferma hoping to attract more than the 1500 attendees at the last meeting in Sweden. Ferma’s Scientific Committee met in late January to finalise the workshop themes. Some of the likely issues to be tackled include cyber risk, the role of the risk manager in mergers and acquisitions in emerging markets, international insurance programmes, global risk mapping and contingent business interruption. It will also focus on the other big issues that Ferma sees facing risks managers in 2013. According to Ms Florence Bindelle, Executive Manager of Ferma, these include environmental liability, captive regulation resulting from Solvency II and data protection laws. Natural catastrophes along with collective redress and corporate governance rules will also be a concern, she added. The Scientific Committee will attempt to tackle these issues from interesting and different angles in order to challenge attendees, said Ms Bindelle. Maastricht, which witnessed the signing of the famous European Treaty back in 1992, is perhaps a symbolic choice of venue and reflects Ferma’s aim of ensuring closer ties between it and national risk management associations. With the city positioned close to the border with Belgium, the event is proving that the European risk management community can and wants to work more closely together, said Ms Bindelle. “In Maastricht the presidents of Narim and Belrim will be on stage together and they want to involve the president of Luxembourg’s risk management association. So the community is working together to make this a success without us pushing for it, which I think is the future for Ferma and Europe. They players should themselves be convinced of the benefits of working together,” she said. Beyond the forum, Ferma will be hosting a conference with Association Internationale de Droit des Assurances (AIDA) Europe. The joint event with the association that represents the European insurance lawyer community will be held on 2 June in Paris and focus on commercial insurance law and regulation issues. Two themes have so far been agreed with two more under consideration. Definite topics will be: coinsurance—who owes what, when and to whom; and embargoes—dissent among public bodies, European and national, the insurance implications. Ferma secretary general Pierre Sonigo said this event will be an opportunity for members to share a discussion on legal issues affecting insurance with experts from several jurisdictions. “At this event we want to make the link between theory and practice and we will address key issues. This forms part of our activities where we are looking to establish alliances with other stakeholders to reinforce connections that we can have with them—so this is a big opportunity,” said Ms Bindelle. 2013 will also see Ferma help to establish a global database of international insurance requirements to solve some of the compliance issues on multinational programmes. Airmic issued a second Request for Proposal (RfP) for companies interested in its creation in December. The UK risk and insurance management association hopes that the project, which is supported by Ferma, can complete by the end of 2014. The project is also supported by a number of other market bodies including the London market-based International Underwriting Association, the North American risk management association RIMS, the World Federation of Insurance Intermediaries and London & International Insurance Brokers’ Association (LIIBA). Brokers Aon, Marsh and Willis are already onboard on the basis that it will initially provide a database to meet their own requirements. “It is hoped it will eventually become a facility for the whole market,” said Airmic. Airmic stressed the basic aims of the project at the back end of last year: “It is hoped that the proposed database will contain details of regulations on a territory-by-territory basis and make it easier for risk carriers, their clients and brokers to ensure that insurance programmes comply in every territory where cover is provided. The issue has emerged as one of the top ‘stay awake at night’ issues affecting risk managers.” Airmic said that the first RfP it issued at the start of 2012 had attracted a high level of response and that more than a dozen organisations came forward. The association explained that the second RfP is more detailed, and includes a timetable leading to implementation. The deadline for response is the end of March. Ferma will this year also continue to concentrate on the development of talent within the risk management profession. It will once again provide scholarship opportunities for students and young risk managers. “We want to attract young risk managers into the profession and help those already here. We will invite one student per association to attend the Ferma Forum and we also have the young professionals initiative with the support of Lloyds where young risk managers attend sessions in London and learn about the market there,” said Ms Bindelle. Ferma tries to juggle needs of risk manager & insurance buyer Jorge Luzzi, President of Ferma, is fully aware that European and international risk and insurance management is at a potentially very important point in its development and history as it prepares to respond to increased demands and expectations placed upon it by business and even politicians and society as a whole. Commercial Risk Europe’s main project each year is the Risk Frontiers survey of leading European risk managers, this year to be carried out through interviews and roundtable discussions in 16 European countries. CRE is also currently carrying out a global Risk Frontiers survey based on interviews and roundtables with risk managers who work for international companies in Europe, North America, South America, Africa, the Middle East, Asia and Australasia. The European surveys carried out over the last three years and the initial discussions with risk managers in Africa and the Middle East confirm without doubt that risk management has risen up the corporate agenda in recent times and that risk managers are gaining more ‘face time’ with CEOs and the main board than ever before. The big question is how to use this new found popularity to further raise the profile and value of individual risk managers within their companies and business as a whole and this question will be tackled in both surveys this year. But there is a suspicion among many leading European risk managers that the profession will never really be able to sell itself more effectively to the main board and wider business community—and be regarded as a true profession on a par with the law, accountancy or even internal audit—until it sorts out its apparent identity crisis. That is whether risk management means pure risk management, insurable risk management or both. Some argue that Ferma and the national associations ought to focus on insurable risk because that is where most members come from and it provides a more focused identity and message to sell to the board. Others argue that insurable risk is simply a subset of enterprise-wide risk management and thus simply forms a part of it. Some argue that corporate risk management’s strong link to insurance somehow debases the concept and lowers its significance in the eyes of the board, while others say that ERM is a load of old hogwash and is the responsibility of the CEO. The decision over whether to include insurance management with risk management in the Ferma’s certification project, or keep it separate, is therefore a big question that could have far reaching consequences for the federation, its raison d’être and future strategy. It will also presumably lead to some vigorous and necessary discussions with peers within the International Federation of Risk and Insurance Management Associations (Ifrima—of which Mr Luzzi is chairman) such as RIMS, ALARYS and RMIA. Mr Luzzi said that the question of whether to combine or separate risk and insurance management in the certification project is ‘part of the big discussion’. “I am trying to talk about this as little as possible because if I comment on this proposal then I could be seen to be trying to influence the working group,” he said when pressed on the topic. “It could be insurance management or enterprise risk management or both. This is very much part of the topic that needs to be followed through, analysed and commented upon. This is an attractive topic currently and one that people like to talk about. All I can say currently is that we are working hard on this and following a process and ultimately it will be a board decision and then the general assembly in June,” added Mr Luzzi. On the broader topic of the relationship between risk management and insurance and where Ferma as a whole should be focused, Mr Luzzi conceded that this is not an easy question to answer. He pointed out that roughly 70–80% of Ferma members are essentially insurance managers rather than ‘pre’ enterprise risk managers. “It is important that Ferma does not forget that,” he said. But he also said that it is important to recognise that Ferma’s membership among the enterprise risk management community, of which insurable risk only plays a part, is growing. “Some members have a strong presence on the board and only do ERM and work in all other activities not just insurance. Some are working in both areas. And even if you have someone within a company who is notionally in charge of all risk you will also have someone in charge of compliance which is part of risk management just as corporate governance and business continuity are part of risk management. Some are involved in financial risk management and not insurance and others loss prevention,” said Mr Luzzi. The conceptual problem that this wide variety of functions and job titles causes is that as one moves further and further away from insurable risk management towards pure enterprise risk management the line becomes blurred between what the CRO does (if that is what the job is called) and what the CEO does. Mr Luzzi agreed that this can be a tricky subject but stressed that an open mind must be retained. “The enterprise risk manager is actually in my opinion the job of the CEO. They are the people who have all the responsibility while insurance managers only have one area. But we at Ferma should remain open to all members because these are all related functions. We should have an open association (at national level) and thus federation at European level. If you looked at Ferma 10 years ago it would have been only insurance managers. But today 20–30% are not, therefore in a way it is already developing. But we will not forget that insurance management is the most important function for now,” he explained.

The big three for Ferma in 2013–lobbying, certification & Maastricht

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