The time and the place
Oliver Wild appears perfectly suited to the position of AMRAE president in this increasingly global world as he has British parents, grew up in France, where he graduated at the International School of Business Administration in Paris, and then studied sustainable development at the Macquarie University in Australia.After ten years working for KPMG in Sydney, in the sustainable development area, he returned to France to join Veolia and moved into risk management.
Adrian Ladbury, editorial director of Commercial Risk Europe, ‘met’ Mr Wild online in the new Covid-dominated world. He found a risk management professional with a very positive vision for AMRAE and the role that risk and insurance management can play in the new world order that the pandemic has ushered in.
Adrian Ladbury [AL]: Oliver, why did you decide to become involved with AMRAE and take on the role of president?
Oliver Wild [OW]: I like the way the association works. It is really a very cohesive team at the executive committee, but also board, level. We’re all volunteers but all very proactive. So, there’s a very good atmosphere in the association and a lot of dedication, and I think it brings a lot of added value, especially in the role that risk managers play now, especially with the crisis that we’re going through. I was very keen to carry on working closely with the association, and the presidency came up. I proposed a new track – not a revolutionary track – more of continuity and carrying on pushing AMRAE as a key voice for the community.
[AL]: Can you sum up the key big topics you will tackle as president? What would you say your main goals are?
[OW]: The big goal is to carry on promoting the role of risk managers in companies. That has worked well for large corporates. There is a clear recognition of the risk manager role. Not only insurance management, but really the whole prevention side, analysing and identifying risks. So, really the goal is to carry on that path and make sure that there is a recognition all the way to the board level and the c-suite discussions.
But we must not forget the smaller companies. With a crisis like this, the large corporates that have invested in risk management have been the most resilient and the smaller businesses have been hit a bit harder. So, the ones that have been able to adapt their business model have probably done quite well. But the idea for the association is not to forget the smaller players. There is a lot of experience that can be transferred to smaller businesses from the larger corporates.
We are not expecting smaller businesses to have a dedicated risk manager. On a smaller scale, everyone is a risk manager, effectively. AMRAE can give them the tools to be able to invest in risk management and be more resilient. This is important because the small and medium-sized enterprises (SMEs) constitute the largest portion of the economy and we want to make sure that the economy is resilient.
[AL]: So how do you spread the risk management gospel down to the SME community in practice?
[OW]: One of the ways of doing that is really to boost the regional presence of AMRAE. We have our head office in Paris, obviously, but all the events that we organise are open to all risk managers in France. We have a few hubs in regions, and the idea is really to give them more support.
We are looking at new offices in Paris. The idea is to create a house of risk management. This would be a house where risk managers can come and meet and increase the frequency of interaction between themselves, and not only at the large events that we organise, such as the one in Deauville or the commission and scientific days that we organise.
Training is another important way to spread the message to the wider business community, not only certified training but training on softer skills, such as how do you interact with the c-suite and board members? Now that the dialogue is at that level, we need to help risk managers engage with that type of personality within the company.
And then, obviously, one of the elements critical to the association and risk managers is the ability for us to be the spokesperson in debates such as the insurance debate on exceptional risks currently taking place. We have been involved in discussions with the government on the potential for a state-backed pandemic insurance solution. We were invited to contribute and we were the ones that gave a more complete picture. We actually are the voice of companies, understand the insurance market, and understand the fact that everything has to be built on strong risk management foundations and that the insurance aspect is really only needed once you have understood your risks. Only then can you consider what portion you want to transfer to the market.
[AL]: It’s great that you were invited to be involved in that because the French government could have easily just gone to the federation of insurers and possibly brokers, and been given a one-sided view…
[OW]: That’s correct. I think that shows how much the association has grown and that it is now more appreciated and considered as a spokesperson or actor that has to be around that table to give that view. Otherwise, we would have ended up with a discussion around an insurance product, which probably would not respond to the needs of large and smaller businesses.
What we’ve found is that we were able to make those stakeholders aware that smaller businesses don’t have the same needs as the larger corporates and that we have to have something that is adapted for each of those stakeholders. Also, we were able to stress the importance of recognising the value of risk management, all the work that companies will be doing with the help of their risk managers to make sure that they are more resilient before they even consider a transfer to the market. This is critical.
[AL]: So how does that work in practice? How could such a mechanism recognise good risk management practice?
[OW]: One of the key discussion points that had to be recognised is that when you’re building this tower, obviously you can have the state that would be the guarantor of the exceptional risk or the major catastrophic risk. However, if you haven’t promoted risk management, companies will not know how to deal with a crisis. Therefore, you have the strong foundations of risk management, by which you understand your vulnerabilities and also your strengths. Based on that, you can actually understand what portion you can actually retain within the company, either on your balance sheet or through a vehicle such as a captive.
[AL]: Captives will surely be central to this. What role would they play in your view?
[OW]: We are promoting captives quite strongly. In France, there are currently very few captives because the creation of a captive is quite complex. The reporting is quite important and can be onerous for the owner. We would like to be able to make this more fluid and easier. That, once again, has to be based on strong risk management foundations because managing a captive is quite complex and it needs quite strong risk management maturity.
Once you’ve understood what the threshold is, which you can move over time based on how comfortable you are with your risk, then you have the basis for a second level of the tower, the captive. Then you can actually have a very smart discussion with the insurance market because you can actually explain all that you’ve done, and how resilient you are and why you have actually set that threshold to transfer to the market. Effectively, you are retaining all the frequency, which is a fundamental of the insurance market, and you’re only transferring volatility.
That is where we need to have a stronger dialogue with the insurance market, so that the insurers actually recognise all the good work that’s being done through risk management and how well the company actually knows its risk. This is not only useful because we are going through the Covid crisis.
This is a fundamental discussion that needs to be held because, since July 2019, we’ve seen the insurers wanting to rebalance their portfolios. If you haven’t, as a corporate, as a risk manager, worked on your risk management and on a vehicle such as the captive, your negotiation power with insurers is a lot weaker. That market trend is only getting more embedded and you need to be able to explain whether you’re exposed to catastrophic risk or not, whether it be natural catastrophes or health issues such as Covid, and how well you’ve actually managed that crisis.
[AL]: I believe there aren’t so many captives in France because the legislation and the tax rules to promote them are simply not there as they are in other jurisdictions. Is there any chance that you can persuade the government and the regulator to change the rules to make it more attractive for French companies to create captives in France?
[OW]: Yes, I think there is progress being made. I think the discussions that we had on exceptional risk and non-damage business interruption has actually raised awareness of the fact that the captive is a good vehicle for corporates. Obviously, one of the barriers for creating that in France is that we don’t have the same regulatory or tax regime as there is in Ireland, Luxembourg or other countries. So, I think if France wants to be competitive as a captive market, it has to adopt that legislation.
There was a public statement made at the Rencontres in Deauville last February by Lionel Corre, who is in charge of insurance in the treasury office of the economics minister, on this matter. He said in front of everyone in Deauville that AMRAE and the French government are working to bring this about. That was encouraging.
[AL]: As for the proposed state-backed pandemic scheme, where are we with the discussions? Do we know when it’s going to happen?
[OW]: There was a first initial report that was published mid-July and discussions were planned to continue in September. AMRAE will focus on making sure that that dialogue continues. One aspect to be addressed is that, while the insurance federation (FFA) was present, it does not represent the large international insurers. So that’s one of the key dialogues that we need to create. Former AMRAE president Brigitte Bouquot will carry on that discussion because she was the one around the table at the start of the process.
For such a scheme, you need to have all the stakeholders around the table, including reinsurers. That was a missing piece, I would say. But it was a very good first step. As stated, it managed to raise awareness on a few areas, such as the importance of risk management and the role that captives can play. It managed to clarify a lot of critical points. I think it’s a strong basis for future discussion and ‘nutting out’ the scheme.
[AL]: I believe that the discussion is not only about a scheme for pandemics but other exceptional events. Is this correct?
[OW]: Yes, and that’s an important point because, initially, the first discussion was, ‘Let’s create a pandemic bond’, or ‘Let’s create a pandemic fund’, a bit like you would have for natural catastrophe. One of the first critical points that we clarified is that if you create a fund for each risk, it’s a never ending problem as the next crisis might not be a pandemic. The next crisis might be a cyberattack touching the whole of Europe or even a global cyberattack. If you combine that with a health crisis, that’s a real disaster. So, we need to have a mechanism that’s flexible enough, adaptable, so that we actually manage to focus on exceptional risks. And we can actually blend the risks, as you would on other insurance products.
[AL]: This should presumably also be happening at a European level too?
[OW]: Yes. AMRAE is obviously strongly involved with Ferma, and we’re in discussion with the other European associations. So, I think there’s a very strong alignment on that position because we’re all spokespeople for corporates. We’re not just dealing with the insurance market. We are really looking at risk management at large, from enterprise risk management all the way to insurance, reinsurance and not forgetting captives.
