10 May 2022

Sarah Williams cultivates new risk strategy at Guardian Life

Sarah Williams found a new job and a new hobby during the pandemic. Now chief risk officer at Guardian Life – and a keen gardener – she is planning to make both flourish, as she explains to Ronan McCaughey

Sarah WilliamsSarah Williams joined Guardian Life at the beginning of February, tempted by a chief risk officer (CRO) role that would require her to "evolve the risk management programme" at one of the largest US mutual life and health insurers.

The former deputy CRO at life insurer Global Atlantic is now embarking on tasks including the development of asset and climate risk oversight at Guardian, which reported $90bn of assets under management and $12bn of premiums in 2021.

Based at Guardian's New York headquarters in Hudson Yards, she leads a group of 17 risk professionals, where she is helping steer the firm through the recent geopolitical and economic shockwaves.

War exposures

Williams was appointed shortly before Russia's invasion of Ukraine, and naturally this is a key concern for her.

"We have looked at third-party and fourth-party exposures to Russia and Ukraine and have focused on our business resilience in the event there is an impact to the US financial system."

Guardian Life had "a very small and immaterial" exposure to Russia and Ukraine via an emerging markets allocation in its investment portfolio, which was subsequently sold.

"We have looked at third-party and fourth-party exposures to Russia and Ukraine and have focused on our business resilience in the event there is an impact to the US financial system"

Aware of the threat of heightened cyber-attacks associated with the war, Williams says the firm "set up a daily call with a cross-functional team, which includes Guardian Life's cyber, communications, business resilience and risk teams to ensure we are monitoring and acting on developments."

Financial markets volatility has been another risk all insurers are closely monitoring since the war erupted.

Most of Guardian's portfolio is investment grade fixed income and Williams says she feels good about where the portfolio is positioned.

"We have not seen this [conflict] spill over to the credit side, and for the broader insurance industry that is where you start to get concerned, if we start seeing defaults. We have not had a credit cycle for some time now, and really not since the 2008 financial crisis."

Investment and inflation

Investment risk appears on Williams's agenda in additional ways.

Her appointment in February happened at the same time as Guardian acquired a minority stake in HPS Investment Partners (HPS), a global investment firm that manages approximately $80bn in assets.

The mutual has said the partnership expands the capabilities of Guardian's in-house investment platform and offers the opportunity to co-develop investment strategies suitable for the insurance market.

Following the HPS partnership, Williams says one of the areas her team is focused on this year is partnering with Guardian's investment team to help evaluate risk-reward decisions on asset allocation.

"We are expanding our financial risk oversight, and in particular, our investment risk team," she says.

Inflation is another risk high on the agenda. Her concerns include the Federal Reserve's response to inflation, the potential for recession, and how these risks would play out across Guardian's products and the assets it invests in.

"We are running stagflation scenarios now and doing analysis to understand and prepare for that type of scenario. I think all life insurers are focused on how inflation will play out."

She adds: "We remain in a market where interest rates are low, spreads are widening a bit, but are still tight, so we need to look at the investment portfolio, and illiquidity risk and complexity risk, and how we think about allocating our risk budget on the investment side."

Covid-19 and climate

Williams is anticipating the end of the pandemic, but she says: "Covid remains a concern, particularly given the new BA.2 variant [infection] levels coming through. The baseline expectation is these will fall and revert to pre-pandemic levels, hopefully by the end of the year."

Before Covid-19 struck, Guardian had a flexible work arrangement, and this helped smooth the transition to remote working, she explains.

Like many organisations, the pandemic has had a seemingly permanent effect on working conditions.

"Covid remains a concern, particularly given the new BA.2 variant [infection] levels coming through"

"We are still maintaining a flexible work arrangement. I personally try to be in the office three days a week, and then I work from home. Most of my team is remote, so we are still sitting on Team video calls almost every day.

"However, I will be hosting a team onsite meeting in May as it is important to build team spirit and get everybody in person, and we will try to do that a couple of times a year."

She adds: "I also find when I'm in the office, I'm not sitting in front of my computer all day. I am having conversations and things that would have taken half an hour can be done quickly over a coffee."

Developing Guardian's climate risk assessment is another strand to her work. The firm's own risk and solvency assessment already incorporates climate risk, but she notes "the industry is still in the early stages of thinking comprehensively around it, and data is a real challenge".

For life insurers, she expects the investment portfolio will be the major source of climate risk.

"There are a lot of models available to look at our corporate bond portfolio but they all come from different angles, which makes it challenging. There is no standard way to assess that today but, over time, I expect companies will converge."

Diversity and inclusion

Williams has clear views on how the insurance industry can boost diversity and inclusion in the risk function and senior management.

In her opinion, most companies are committed to increasing diversity, and although she has seen improvements across the industry over her career, "there's still more work to be done".

At Guardian, Williams says the focus is to embed its justice, equity, diversity and inclusion programme into the fabric of its culture.

Employee groups are another important way to foster diverse and inclusive workspaces, she adds.

"I have often been a sponsor of women leadership networks, and recently joined as a co-sponsor of LA VIDA!, an employee resource group that connects Latinx/Hispanic colleagues to promote a multi-cultural perspective, provide professional development opportunities, and aid Guardian in developing products and services for Latinx/Hispanic consumers."

"Once you are in the [insurance] industry and understand how it works, it becomes a natural place to stay"

Williams is a great advocate for the insurance business and has always worked in the sector. She says: "In my senior year of college, I got a call from an insurance company about a position. I was a broke college kid and needed a job. And I have been in insurance ever since.

"Once you are in the industry and understand how it works, it becomes a natural place to stay because you develop a real understanding of the products and financials."

She adds: "What I like most and least about the role is that there is never a day that is the same for me. That is fantastic, but it also makes it a challenge."

Staying connected

Williams stresses it is really important for insurance professionals to stay connected to the external environment and "keep our finger on the pulse of what is happening globally and nationally because there is so much that is interconnected, and the goal posts are always moving."

"That strategic aspect of being nimble and constantly evolving our thinking, is what makes the CRO job so interesting."

These are busy times for Williams as she settles into her new role and drives Guardian's agenda. But she exudes calmness and is full of warmth and good humour.

Williams certainly has plenty of outside interests to keep her grounded. She has four children who all live close by, and she is now a grandmother of three. Most of her free time is spent enjoying time with her children and grandchildren and keeping up with all their activities.

She has also found time for new interests. "I also started gardening and farming during the pandemic, which I now love to do. There is something very calming about the process and it's gratifying to watch the seeds that we've planted grow each year."

Her love of gardening and farming is fitting in this season of spring, a time associated with rejuvenation and renewal. And by cultivating and expanding Guardian's risk strategy, Williams and her team will help position the insurer for continued growth.