Speed, communication and actionability have become more important than ever in the enterprise risk management scenario testing process, following the ravages of Covid-19 over the last 18 months.
Speaking ahead of InsuranceERM's Americas virtual conference, panellists for the “Reviewing stress and scenario testing practices for high risk, low frequency emerging risk events” debate stated the importance of developing scenarios which can be used in real-time and with more frequency than in the past.
“Speed is a big one for us,” said Daniel Finn, head of risk solutions at software vendor and advisory firm Conning. “People want to be able to test more frequently and not just as part of their annual process. During Covid last year, insurers wanted to be able to run these tests almost on a daily basis. Finding a way to be able to deliver that, given that a lot of our models tend to be designed around multi-year processing and longer-term projections, is key.”
Meanwhile, Julia Chu, chief risk officer at Markel, highlighted the need to communicate stress tests to senior management as becoming more important than ever. Partly this is dependent on making the information appreciable across the board.
“The risk is embedded through the whole organisation, so the better they understand it, the better we can work together,” she said. “You need to understand the best way to work through a scenario so that people understand the results.”
Adam Lei, head of enterprise risk management at National Western Life Insurance, concurred, stating it was imperative to be able to communicate scenario analysis and raise it beyond theoretical practices and to something that can be actionable in stress scenarios—as seen over the last year-and-a-half.
The panellists will be speaking at the InsuranceERM Americas virtual conference held on 22-23 September.
Click here to register or to view the agenda and full speaker line-up.
