With Asian insurance regulators putting forth a series of preemptive reforms to tighten the management of insurers, carriers are demonstrating proactive risk stewardship and strengthening their ability to comply with higher prudential standards. This move is evident in the results of an April 2011 regional survey conducted by IDC Financial Insights asking Asian insurers on the risk mitigation techniques that their organizations will be focusing on in the next 12 month.
"Our international markets have grown increasingly entwined and riskier by the year, and insurers, being in the business of risk aversion, understand the need to astutely manage their personal risk profile," remarks Li-May Chew, CFA, Associate Research Director for IDC Financial Insights Asia/Pacific. "There is also increased pressure from internal and external stakeholders for management to demonstrate better awareness, oversight, and controls around risk."
Numerous potential business benefits can be derived from getting one's risk management house in order. For instance, up-to-date and secure systems would minimize the risks of security breaches and fraudulent activities from occurring. One does not want to be at the receiving end of such incidences, as these not only bring about instantaneous revenue loss but, more devastatingly, create reputational ramifications, loss of confidence from current and potential customers, and potential impact from legal liabilities.
To better evaluate and mitigate risk for risk regulatory compliance, IDC Financial Insights observes that insurers are channeling more resources into technologies. These include tackling issues around their respective countries' regulatory mandates, determining if they should prepare for international mandates like Solvency II and best practices from International Financial Reporting Standards (IFRS), and, developing risk-based performance matrices that are reflective of the long-tenured risk profile of insurance policies.
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