2015.10.06 resilience and large claims

FERMA Risk Management Forum October 2-5, 2011 Stockholm Sponsorship & Partnership Program

Resilience and Large Claims

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Resilience & Large ClaimsJames CraskEntreprise ResiliencePwC

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An introduction to Enterprise ResilienceJames CraskEnterprise Resilience, PwC, UK3

BRUSSELS, 20-21 October www.ferma.eu

FORUM 2015Venice, Italy 4-7 OctoberThere is more to resilience than insurance alone4Source: Knight / Pretty 1996 2010Companies with a positive approach to disruption/ crisis

Other CompaniesStakeholder valueNon-recoverersTime(250 days)

Recoverers


FORUM 2015Venice, Italy 4-7 OctoberThe context5Modern challenges:Faster world, enabled by technology Greater interdependencies & global influences Leaner organisations, removing buffers Failures still happen despite investment in risk management

Average lifespan of an S&P company:In 1930 the average company lasted 90 years; by 2012 it was 18.


FORUM 2015Venice, Italy 4-7 OctoberThe capacity of an organisation to react to change to survive and evolve6

Ability of an organization to anticipate, prepare for, and respond and adapt to incremental change and sudden disruptions in order to survive and prosperBritish Standard for Organizational Resilience BS 65000


FORUM 2015Venice, Italy 4-7 OctoberDefining Enterprise Resilience7Resilience cannot be achieved by processes alone; less visible attributes also enhance or diminish resilienceEnterprise resilience is about long-term surviving and thrivingResilience is generated (and lost) by who we are, what we know, what we do and how we do it.Well understood resilience can be measured, manipulated and leveraged

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FORUM 2015Venice, Italy 4-7 OctoberThe elephant in the room8

Few executives say: We have a Resilience problemThey say something is broken, feel on the back foot, comment on being surprised or have concerns not easily explained.We should think about the underlying resilience issue and focus attention on addressing this. If we dont, we risk an over-emphasis on treating symptoms over causes.Repeated failuresChange creating uncertainty Erosion of trustSub-optimal performanceRegulatory pressuresLiving on past successMerger or acquisitionLeading industry standardsExciting new innovationMoving into new marketsPotential triggers for the conversation


FORUM 2015Venice, Italy 4-7 OctoberResilience is more than BCM: AIRMIC Roads to Resilience9Resilient companies have exceptional risk radar to detect changes in the external and internal situation 1Resilient companies have diversified resources and assets to facilitate alternative approaches and adaptation to change 2Resilient companies build strong relationships and networks, both internally andexternally 3Resilient companies have the ability to respond rapidly and decisively to an emergingcrisis 4Resilient companies review and adapt based on experience and changing circumstances5


FORUM 2015Venice, Italy 4-7 OctoberUnderstanding what creates resilience10

IdentityIncludes: values, social capitalContext and environmentIncludes: understanding of networks & dependenciesLeadershipIncludes: governance, stress-tested strategies, innovationValue protectionIncludes: risk management, BCM, security, crisis management, etc.Capability and capacityIncludes: people, supply chain, finance


FORUM 2015Venice, Italy 4-7 OctoberThree key players driving resilience11CEOShort term issues are delegated. Resilience allows me to take a look at our overall capacity to survive and thrive, long term.Head of Internal AuditI suppose resilience functions include Risk, BCM, security, and so on. Whilst we have all these, we still suffer disruptions. Robust, reliable way to assess resilience Reluctance to create more work/another processLean toward key resilience indicatorsInitial focus on the tangible aspects of resilienceInterest in methodologies to assess overall resilienceLeveraging resilience to deliver strategic input to BoardCRO/ COOWhilst resilience takes the long view, the short term disruptions and the need to drive greater efficiency remain a priority

Responsible for long term future, focus on operationsDesire to integrate and eradicate unhelpful silosNeed for efficiency without loss of specialist skills and functions


FORUM 2015Venice, Italy 4-7 OctoberEnterprise resilience hypotheses12Resilience is about opportunity, adaptation and evolution as well as disruptions and crises. Resilience cannot be achieved by processes alone; less visible attributes also enhance or diminish resilience.Enhancing resilience requires a framework approach and continual assessment.Strong & empowering leadership is required for resilience, supported by good governance.Maintaining the ability to respond and recover from crises will always be a key requirement for a resilient organisation


FORUM 2015Venice, Italy 4-7 OctoberResilience & Large ClaimsRianne S. Baumann LLMHead of Liability Europe, Crawford & Company

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14Video


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Principles of resilienceSource: Cranfield School of Management on behalf of Airmic








FORUM 2015Venice, Italy 4-7 OctoberConclusionsThe existing world of PD/BI Losses:Focus on:Resources and assetsRelationships and networksRapid responsesReview and adaptBut all in relation to the existing type of losses.Inadequate focus on:Risk Radar!19



The New Kids On The Block


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FORUM 2015Venice, Italy 4-7 OctoberConclusionsStrong focus on: Risk Radar

The other four principles of resilience should be looked at with the risk radar knowledge in mind!

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Whats next?




FORUM 2015Venice, Italy 4-7 October27Does it matter what is next?


FORUM 2015Venice, Italy 4-7 October28Effective risk radar will ensure that an organisation can anticipate and plan responses to the new kids on the block.


FORUM 2015Venice, Italy 4-7 OctoberSummary of main resilience benefitsOptimal protection and utilisation of resources to take advantage of opportunities

Supportive relationships and networks to build successful brands and reputation

Knowledge of emerging risks to develop crisis plans to respond to adversity

Identified lessons and amended business model to gain competitive advantage29


FORUM 2015Venice, Italy 4-7 OctoberResilience & Large ClaimsAnnemarie SchouwRisk and Insurance, Tata Steel30

But what when you are hit by a major incident31

Annemarie SchouwR&I Manager Tata Steel Europe


FORUM 2015Venice, Italy 4-7 October

Resilience & Large claims How Resilient are you?

Do you know what makes you company tick and .. keeps on ticking?Do you know your BI scenarios? Are redundancies in place?Who are your stakeholders externally but also internally?How do you communicate to manage expectations?32



Resilience & Large claims

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Resilience & Large claims December 27th 2010 - PL22 Fire (lessons learned)Immediate actions

Inform managementSecure location (safety, contamination)Inform and involve broker/ loss adjuster/ contra adjuster Estimate financial loss (MD/BI)Policy- legal aspects

CommunicateInstall a dedicated workgroup / consultative structure34



Resilience & Large claims December 27th 2010 - PL22 FireFollowed by

Dont do it alone, involve experts!

Investigate what happened (forensic experts)MD/BI financial impact ( loss adjusters. contra adjusters)Determine time frame rebuilding - permits, contractorImpact on process flow redundancies in placeAlternatives, outsourcing, down grading

Keep Communicating manage expectations

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Resilience & Large claims MD/BI financial impact Buy-in from managementValidate in an early stage your finance model/ loss modelAnnual plan, economic recession, client portfoliosConsider alternative investments to reduce extra costsSeparate administration and project report showing spent salvage /rebuild costs

CommunicationWeekly meetings with loss adjuster, contra adjuster, broker ANDown management 36



Resilience & Large claims 37





Be prepared never waste a good crisesand

communication, communication39



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Thank you !41

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2015.10.06 resilience and large claims

Education