Tom Hughes won chief risk officer of the year in InsuranceERM's 2023 Annual Awards for UK & Europe. He talks to Ronan McCaughey about managing risk during a period of macroeconomic turmoil
Game, set, and match in this year's chief risk officer (CRO) of the year category goes to tennis fan and Domestic & General's (D&G) group CRO Tom Hughes.
Hughes wins the award for his achievements, and that of the entire D&G team, in three areas. These include driving multiple sustainability initiatives, providing a thematic review of macroeconomic headwinds and his approach to risk management, which has enabled him to become a trusted leader for the senior management team.
UK-headquartered D&G provides coverage, maintenance and support for a range of domestic products and consumer electronics, such as televisions, washing machines and boilers.
D&G operates across 12 markets, including the UK, Spain, Germany, France, Portugal, Italy, Australia and the US. The group has over 2,800 employees.
"A customer will contact us to tell us that their appliance, such as a washing machine or a dishwasher has stopped working and ask us to support with a claim. We try and repair appliances in the first instance and have a 99% claims acceptance rate," Hughes explains.
Hughes says the beauty of D&G's business model is its strong relationships with equipment manufacturers. This means customers can benefit from dedicated engineers and also have the flexibility to upgrade their appliance if it cannot be repaired.
The past year was positive for D&G, says Hughes, with the company managing 8m subscription plans globally. "We have more customers than last year, which is positive given the challenging external environment. You have to give customers a reason to stay and they really value what we are providing."
Hughes's CRO win recognises his commitment to environmental, social and governance (ESG) activities at D&G. In June 2022, D&G partnered with onHand, an on-demand volunteering app which enables the company's teams to support communities and directly contribute to CO2 reduction. To date they have planted over 30,000 trees in the D&G forest.
"The premise of D&G is very sustainable; to make the world a better place, one repair at a time"
A citation from Sanjay Lobo, the chief executive of onHand, praising Hughes for being "simply phenomenal in engaging teams across Domestic & General with onHand" impressed the InsuranceERM judging panel.
Hughes says climate risk is relevant for every business. He comments: "The premise of D&G is very sustainable; to make the world a better place, one repair at a time. We exist to help protect appliances and keep them working."
The way Hughes provided assurance to the D&G board during 2022's challenging macroeconomic climate is another reason for his award win.
He was quick to provide in-depth thematic reviews that ensured both D&G's first and second lines were informed about the implications of headwinds, such as disruption to its supply chain due to Covid-19 and the Russia-Ukraine war, the risk of cyber-attacks and the impact of high inflation and a cost-of-living crisis.
Through Hughes's leadership, D&G's risk team developed risk assessments to identify threats, mitigations and action plans across its business functions.
Noelle Douglas, head of operational risk and financial crime at D&G, says: "Tom's leadership style has created an environment that actively empowers his teams to undertake ambitious and creative collaboration initiatives with the business."
"I really love the breadth of the role and getting involved in lots of different topics"
She adds this approach has ensured Hughes's team are "trusted business partners supporting the business in an increasingly complex environment".
As well as managing approximately 70 people in the risk team, Hughes is responsible for risk, regulatory and compliance. In addition, he deals with quality assurance and data privacy.
He says: "I really love the breadth of the role and getting involved in lots of different topics."
International business support
The way Hughes has proactively supported D&G's business internationally is another reason why he scoops the CRO award.
An important development through the year was his leadership in delivering closer integration of the group's risk function with those in the business's other markets, such as in the EU, the US and Australia. For example, he created a more coherent consolidated view of the most material risks and mitigations from across the group.
Any business that is not totally concerned about cyber now is naïve
Commenting on the key risks facing D&G, Hughes says: "Any business that is not totally concerned about cyber now is naïve. Regardless of the maturity of your controls and defences, and we have invested heavily, the sophistication of some of those cyber threat actors continue to escalate. You must work under the assumption there could be an event in the future and be prepared."
Economic risk is also highly relevant for all insurers currently and inflation is a big topic for the industry, in terms of rising claims costs and the potential for dampening consumer demand.
Hughes comments: "Consumers are really feeling the pinch at the moment. This a time when it really emphasises the value of insurance products. We provide customers with peace of mind, convenience and no hidden costs."
Hughes says D&G differs from most other P&C insurers when it comes to reserving.
"Our claims are very short-tailed with relatively consistent demand for repairs and no exposure to catastrophe losses. Reserving for us is less volatile than you might see at other insurers."
Looking ahead, Hughes says technology continues to be a focus area for D&G. "Contact centres have always been a big thing for D&G, and will continue to do so, but we are also seeing more and more customer appetite to interact with us online."
Hughes also points to diversity and inclusion as a key topic for the business. "There has been a lot of progress over the last year in terms of the executive team. We now have much stronger female representation and also much improved ethnic representation. That is great, but that is not the end, and it is a journey."
He says a benefit of the post-pandemic world is having more flexibility where D&G hires staff. This has helped attract diverse candidates and working parents who need flexibility.
Read about the other winners in the InsuranceERM UK & Europe Annual Awards 2023, sponsored by Arthur
"We talk about presence with purpose. What matters is not sitting around with your colleagues every day in the same place. What really matters is when you come together you do it for a purpose.
"For example, my leadership team and I today will be doing some coaching with an executive coach."
InsuranceERM's CRO award caps a great year for Hughes after he was highly commended in the category last year.
Hughes is a tennis fan and when he is not working, he enjoys doing a park run on Sunday mornings with his son. He also loves gardening and spending time with his friends and family.
Tom Hughes biography
Hughes joined D&G in May 2018. He has spent more than 13 years in the insurance industry, including roles at RSA Insurance Group, and a number of senior positions at Axa.
Prior to this, Tom qualified as a chartered accountant, holding roles in audit and finance at Deloitte and HSBC.