Assignment Task:
The future of insurance: as risks mount, insurers aim to augment protection with prevention
Humans have always dealt with risks arising from the natural world and their own behaviour. But we appear to have entered a particularly intense period of turbulence. Climate change, disease, aging populations, and technological disruptions are combining to radically change the risk landscape-both through more risks and different types of risk. The changes thrust insurance companies into new roles. They have the chance, perhaps even the duty, to take a firmer hand in moving beyond reimbursement for damage and controlling losses to incentivizing behaviours in ways that will reduce risks. If they can pull it off, the future of insurance looks bright. In 2021 alone, a variety of conventional risks (such as flooding in China and Germany and heat waves in the US and Canada) and unconventional risks (such as ransomware cyberattacks on the Colonial gas pipeline) together with riots and looting in South Africa disrupted the lives of many millions of people. Such events, once outliers, are becoming the norm. The consequences for an under protected world in 2030 with low insurance penetration, particularly in emerging markets, may be severe. For instance, although climate change-related weather events have reached corporate board and government agendas for years, insurance doesn't cover most losses from natural catastrophes. According to Swiss Re, global economic losses resulting from natural catastrophes between 2011 and 2020 totalled more than $2 trillion, with only about 35% of these losses covered by insurance. Similarly, as the Covid-19 crisis brought into sharp relief, societies are under protected against health risks; Swiss Re estimates that health protection gaps in Asia alone totalled $1.8 trillion in 2017. A similar story plays out across other coverage lines and region.
Question:
You have recently been appointed as the Executive Director at Sanlan Private Limited and you will be overseeing their Risk Management initiatives and strategies. Part of your task is to make sure that you work towards turning around the organisation through making sure that their risk management strategies are context specific and that they are aligned to the changes taking place in the market. This will certainly require both strategic and tactical planning and you have therefore put together a team that will assist you in achieving your mandate. With reference to the insert provided, highlight on how you will handle the following tasks in your new role.
You have recently been informed that your predecessor Mr Malvin Musser Padayachie was in the process of adopting and implementing the COSO ERM framework as part of his alignment strategy. Evaluate the significance and relevance of this framework for Sanlan Pvt Ltd. Advise if you would you go ahead with its adoption.