Understanding Connected Business Exposure

FILE 2019052

Suki Basi

Russell Group Limited

Changing Corporate Landscape – Moving from Product to Service Economy.

12/06/20192

Changing Corporate Landscape – Moving from Product to Service Economy.

12/06/20193

Source: 2011 Census Analysis, ONS

12/06/20194

REVENUE

CONCENTRATION BY

COUNTRY AND CITY

65,000

42% OF ALL

COMPANY

REVENUE

COMPANIES

WITH REVENUE

$90 trillion

EXPOSURE CONCENTRATION WITH

REVENUE CONCENTRATION

REVENUE CONCENTRATION

BY COMPANY AND SECTOR

Changing Corporate Landscape – Increasingly Concentrated.

12/06/20195

Operations Peers

Customers of

CustomersCustomers

Suppliers of

SuppliersSuppliers

Changing Corporate Landscape – Increasingly Connected Across Locations.

12/06/20196

Changing Corporate Landscape – Risks are Connected Across Locations.

Connected and Unmodelled

Source: Swiss Re Institute

Unmodelled Events

Modelled Events

Changing Corporate Landscape – Growing Unmodelled Events.

12/06/20197

Insurance Information Institute

Changing Corporate Landscape – Growing Uninsured Event Years.

12/06/20198

Insurance Information Institute

12/06/20199

Changing Corporate Landscape – Growing Size of Events.

Statista

12/06/201910

Changing Corporate Landscape – Risk Manager Concerns are Changing.Source: FERMA Risk Manager Report - 2018

12/06/201911

Supply

Chain

Natural

Peril

Cyber Credit

Drivers

Drivers

Risk industry

Political Social Economic

Macr

o f

orc

es

ReceiversAviation Property CasualtyMarineEnergySpace

Technology EnvironmentalLegal

Political

Changing Corporate Landscape – Insurance Classes and Exposures are Connected.

12/06/201912

Retro InsurerRe-InsurerInsurerInsured

Capital market

Captive market

BrokerRe-Insurance

Broker

Retro Insurance

Broker

Supply

Chain

Natural

Peril

Cyber Credit

Connected business exposure

Political

Changing Corporate Landscape – Connected Exposure Lost in Value Chain.

12/06/201913

Changing Corporate Landscape - What does this mean for Credit Insurers

Flow of money and exposure are increasingly connected

12/06/201914

Changing Corporate Landscape – Issues and Opportunities for Insurers.

The global economy is

more inter-connected

Risk and exposure

is more connected

Events are

multi-class

Exposure lost

in insurance

value chain

Multi-class insurance

opportunity missed

Understand flow of money

between business

Quantify connected

business exposure

Understand business

- insurance mapping

Improve exposure

knowledge from

multi-class events

More opportunities

for multi-class

products.

Building Client Value

12/06/201915

What is Needed – Building Client Value Through a Connected Theme.

12/06/201916

Da

ta V

en

do

rsIntegrating Knowledge

INTEGRATED DATA EXPOSURE DATA DECISION SUPPORT

Dimensional Data

By Sector

Opportunity and

risk exposure

Qualitative and

Quantitative

per Sector

Scoring company

exposure

Analysis by

Scenario,

Event

Peril,

Coverage,

Location,

Sector,

Connection,

Gross and Net

First / Next Loss

Integrated across

Aggregation

Event Exposure

RDS

Pricing

SOURCES SERVICES

Construction

Retail &

Wholesale

Transportation

Energy & Power

Financial

Institutions

Professional &

IT Services

Media &

Entertainment

Mining

Fishing,

Farming, Forestry

Manufacturing

CLIE

NT

What is Needed – Building Client Value Through Data and Analytics.

12/06/201917

Case Studies

Transportation Layer which is the combination of the transport, finance &

insurance and energy & power industries.

SERVICES

PRODUCTS

Telecommunications

AviationShipping

Road & Rail

Satellite

FINANCE & INSURANCE

ENERGY & POWER

TRANSPORT

12/06/201918

Case Study 1 – Application of Approach in Transport.

12/06/201919

Russell’s approach to port accumulation focused on the following scope:

a) Focus on G20, trade routes and areas of interest. The 47 countries that meet this criteria are:

G20: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan,

Korea, Mexico, Russia, South Africa, Turkey, UK, USA

Trade Routes: Egypt, Panama

Interest: Bangladesh, Colombia, Hong Kong, Iran, Malaysia, New Zealand, Norway, Pakistan,

Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Venezuela, Ecuador, Peru, Morocco,

Belgium, Spain, Portugal, Netherlands, Sweden, Denmark, Greece, Iceland, Ireland, Poland

12/06/201920

b) Ships: All cargo carrying ships

c) Ship Movements: All movements of cargo carrying ships

d) Trade Flow: All trade flow by commodity, value and quantity in / out of above list of countries

e) Ports: All ports, terminals and berths in above list of countries

f) Timestamp: Data is year to date and updated quarterly in arrears

12/06/201921

Port of Singapore Dollar Exposure Movement by Month in 2017.

12/06/201922

Trade at risk in Strait of Hormuz.

12/06/201923

INSIDE OUT*

Financial*

• Creditworthiness

• More score

• Investors

• Investments in

• Investment out

• Share price

• Gearing

People*

• Executive Directors/

Non Executive Directors

• Major Shareholders

• Investment Banks

• Key Staff with links to PEP

• Environmental

• Human

• Equality

• Values

• Reputational credibility

Product*

• Concentration

• Volatility

• Exposure to Trends

• Criticality

• Resilience

Location*

• Physical Sites

• Markets

OUTSIDE IN

Events

What is the impact

of an event on the

“inside in” of a

company?

Case Study 2 – Scoring Portfolio Connected Exposure

Enables opportunity to

quantify risk and

support portfolio

concentration or

diversification strategy.

12/06/201924

Connectivity of FTSE 100 Companies and their Suppliers

12/06/201925

Visualising Portfolio Connected Exposure.

12/06/201926

Summary

12/06/201927

Summary

12/06/201928

Summary

Thank you