Accelerating into the future of risk management

Russell Group’s Suki Basi on the need to understand how risks are connected within exposure management.

Imagine you can create a data and analytics solution which provides the insight to achieve enterprise-wide resilience and a robust forward-looking connected capability. What might that look like? The following is a short, imaginary user case study of Russell’s connected risk platform. The question is, is it imaginary?

Use case study: Andrew, CEO, The Insurance Company

Andrew wakes up at 6am, rubs the sleep out of his eyes and does what he does every morning: 30 to 45 minutes of HIIT training where he runs or cycles. Andrew is therefore extremely fit. He does, however, suffer from anxiety at work, which is not unusual for an insurance group CEO. Today, he is particularly anxious about the escalating threat in the South China Sea.

After breakfast, Andrew opens his laptop. The news feed tells him that a cyber-attack which started in the Far East has affected several Asian banks and seems to be spreading further, with concerns that it could impact US and European banks, and other industries. It has got out of control and is spreading. Andrew logs into his newly purchased Russell Connected Risk platform and runs an analysis for an event involving the affected Asian banks’ D&O and cyber policy limits, as the company has more than likely written these banks within its cyber and financial D&O portfolios. He asks for an updated aggregate exposure analysis across nearly 30 policy lines that his enterprise underwrites. Luckily for Andrew, the analysis reveals the net exposure after reinsurance to be within tolerance levels.

Multi-class exposure management

Andrew calls a senior management meeting to discuss the measures needed to reserve for the event and how to communicate to investors and the media. Within the hour, the call to the investors has been scheduled and the media are starting to hassle the press office. Andrew’s team has delivered further threat intelligence confirming that the cyber event is limited to regional Asian banks and the threat to US and European banks is minimal, but Australian banks had been affected. Andrew’s company did not write Australian banks. In fact, the decision not to write Australian banks was principally due to the likelihood of contagion from local Asian banks, highlighted by the connected risk platform, which would have generated net exposure after reinsurance beyond tolerance levels and required immediate capital raising. This proactive exposure management may have saved Andrew’s company.

At the investors call, Andrew explains that although the event is significantly above appetite, it is well within tolerance, will not require fresh capital, and will be managed in the normal way. Andrew informs them that, "We are currently working with our clients to help resolve the situation and bring their businesses back online as quickly as possible,” reiterating the intelligence that his company had received. The investors are impressed with Andrew’s assuredness and access to detail. Andrew explains that they had invested heavily in systems, data and people, so that scenarios and their resultant exposures could be modelled proactively.

Connected risk analysis

“Everything is connected,” Andrew reflected, closing the investor call with the remarks: “The future lies in scalable enterprises built on accelerant technology, which empowers people.”