How NFU Mutual built an award-winning risk team

Published in: Risk management, Conduct risk, Corporate strategy, Capital management, Regulation, Investment risk - strategy, UK, Brexit, Covid-19

Companies: NFU Mutual

NFU Mutual won risk team of the year in InsuranceERM's UK & Europe 2021 awards. The provider's risk director and chief risk officer Iain Baker shares the mutual insurer's pro-active strategy and steps to success with Ronan McCaughey

Iain Baker

NFU Mutual won InsuranceERM's risk team of the year for the dynamic and engaging way it won hearts and minds to deliver its goal of building a single risk team.

Teams in the NFU Mutual's risk division were previously part of a wider finance division and were disparate in both work activities and interaction.

This all changed in the summer of 2018 with the roll-out of the "Pro-ACTIVE for 2020" project – and the UK mutual insurer's decision to merge its risk, actuarial and compliance functions.

"The profile of the risk division within NFU Mutual has never been higher"

As well as an opportunity to bring the newly formed division together and work on common goals, the project also sought to promote staff welfare, career development and raise the risk division's brand internally.

From the summer of 2018 to spring 2020, across six workstreams, NFU completed and embedded 21 objectives within the risk team as part of the initiative.

This included a risk professional standards tool, which allows employees to see the technical skills, values and behaviours required for every role in the risk division, and allows colleagues to self-evaluate themselves.

The project also resulted in resources being made available to colleagues and line managers to assist in having more valuable one-to-one conversations and understanding colleagues’ career aspirations. 

These include a deeper understanding of NFU Mutual’s performance appraisal process, advice on how individuals can identify their strengths and excel even further at these, and guidance for line managers on how to identify, assess and develop talent within their teams.

Dealing with Covid-19

The onset of coronavirus in 2020 and its impact over the past has proved a major test for NFU Mutual, like all financial services providers.

NFU Mutual's risk director and chief risk officer Iain Baker explains the provider has successfully risen to the challenge by transitioning to a remote working environment, while meeting customers' needs. 

He says: "In a matter of weeks, we moved from a few hundred staff working from home periodically to nearly 96% of our entire staff base predominantly working from home."

While Covid-19 overshadowed much of 2020's activities, Baker says the insurer also had to contend with Brexit, the UK's departure from the EU and the 2021 landscape after the deal was agreed between the UK government and the EU.

He explains the mutual's risk teams worked throughout the year to monitor the ongoing developments, analyse and model potential scenarios and built "robust contingency plans" to mitigate the potential impacts of Brexit on its customers, suppliers and NFU Mutual's investments, liabilities and overall business strategy.

Asked how Baker and his colleagues have transformed NFU Mutual's risk function at a very difficult time, with so many forces of change, he says: "I've been particularly pleased with the speed in which my team has been able to react to a changing environment.

"There is a danger that risk professionals build a reputation for considered opinions, but ones that take too long to surface in a commercial business environment – and this element of agile investigation, assessment and response is very much my vision for a modern risk function."

Future risks on the radar 

In Baker's view, responding to Covid-related challenges will be crucial throughout 2021.

"In addition, we're keeping a very close eye on various regulatory themes such as vulnerable customers, the financial services future regulatory framework review and fair pricing," says Baker.

He adds climate change, along with customer and staff expectations around environmental issues, will also have to be monitored carefully.

"The real challenge is to rebuild customer confidence in the insurance industry's ability to meet customer expectations"

Baker says NFU Mutual is also working to mitigate the emerging risks associated with significant periods of remote working. This has involved using the expertise of Geoff McDonald, an internationally recognised mental health activist and campaigner.

As for the wider insurance market, Baker says: "I think the real challenge is to rebuild customer confidence in the insurance industry's ability to meet customer expectations and provide products and services that are clearly seen to represent value for money.

"Customers need to understand what they've bought and, in simple terms, the protection that policies offer them."

He stresses the need to be mindful not to centre all business continuity thinking around another pandemic and "forget the next crisis that may hit the insurance industry will be completely different".

There are two specific areas Baker wants to focus on over the next 12-18 months as part of his vision for NFU Mutual's risk function.

This includes the development of staff, keeping abreast of the latest tools available to risk professionals and enhancing its role as providers of independent assurance across the group.

Baker ends the interview on a positive note noting "the profile of the risk division within NFU Mutual has never been higher".

As he says: "If I get this right, we will be able to evidence the added value we bring by not just recognising and mitigating downside risk, but identifying potential opportunities that will benefit our members both now and in the longer term."

How to be a successful chief risk officer

Baker says it is essential to achieve a sensible balance between pragmatism and assertiveness.

"You need to know when to push for change and request additional information and analysis, whilst recognising business challenges and conflicting priorities. To be successful you therefore need to build some very strong relationships, based on mutual trust, with key stakeholders across the business.

"That way, you know discussions will be open and honest and problems won't be hidden through concerns over future actions or potential retribution.

"It goes without saying that success is also heavily dependent on having a very strong and capable risk team behind you."

Ronan McCaughey