Jean Roch Sibille: Be wary of asset bubbles and inflation

Published in: Risk management, People, Covid-19

Companies: Allianz Life

Jean Roch Sibille, CRO at Allianz Life reviews the key ERM developments of 2021 and his outlook for 2022

What steps have you taken to return to the 'new normal' working pattern?

Jean Roche SibilleThe team has had the time to adjust to the "new normal" and we enjoy the additional flexibility, as well as the efficiency gained from the virtual environment.

Overall, I think we are achieving even more results than before the crisis. In particular, because it forced us to focus on real and material issues as we had to steer a large amount of risks materialising at once.

On the negative side, the interactions within the teams and with the business are not yet as motivating and insightful as they were pre-Covid. Aside from measuring the risks, risk management is a lot about understanding the broader picture and influencing the company to take mitigating actions.

This is proving more difficult in a remote environment.

What trend is going to have the biggest impact on the insurance industry in 2022?

Given our company risk profile, the biggest risk I see today is the continuous increase in asset bubbles and the economic uncertainties around inflation. Pre-Covid, valuations and debt ratios were already at historically high levels, and the situation is probably even more extreme today.

There have been massive public incentives to support the economy, with very little credit experience to speak of in 2021. This is likely only providing a delay before issues materialise, which could create significant disintermediation risks leading to default, downgrades and repricing.

What emerging risks are you most concerned about?

Aside from the risk topics of growing importance that are often discussed within the industry, like cybersecurity risk and climate risk, I see it as a necessity for the risk function to get more involved in project and transformation risks.

Many companies are engaging on a journey to agile working, which targets quick results in a fail fast and iterative way. This may create new types of risks and will require risk managers to evolve to better support the business going forward.

Sarfraz Thind