Lloyd’s Market Association (LMA)’s latest report has revealed the top concerns for corporate risk officers (CROs) within Lloyd’s managing agencies.
The report, entitled “The changing face of risk: breaking the vicious circle,” was prepared by a subgroup of the LMA CRO committee and led by Vinay Mistry, in conjunction with PwC. Its overall view of risk reflected a shift in focus from specific macro issues toward fundamentals.
“The timing of the survey, only a couple of months after a bruising business planning process, is likely to have strongly influenced views. But we believe the survey results are reflective of current risk issues that the boards of our member managing agencies are grappling with on an ongoing basis,” said Paul Davenport, finance director at LMA.
The report revealed that the firm’s CROs are mostly concerned about pricing, cost reduction, change management, market modernization, and competition – all ranking ahead of exogenous factors such as cyber risk and climate change.
The majority of the respondents were also concerned about delegation of underwriting authority – with 85% believing that a relatively high level of designated business in the market is unsustainable unless the risks are managed more effectively.
“In effect, these findings take us back to Risk 101: whereas we have focused on macro-risk issues in recent years, we are now considering the bread and butter of risk management as the greatest threats,” said Phillippa Smith, chair of LMA CRO committee and group head of risk management at Barbican Insurance.
“More widely, due to potential market fatigue on big topics like cyber, Lloyd’s CROs are focused more on the operational implications. That vein of operational risks has flowed through to the risks identified in the survey.”