Page 17 - The Insurance Times February 2025

McKinsey's report mentions the talent problem in all areas and provide an independent view to the Board and man-
of risk management (except financial crime). This shortage agement. In this regard, the question was asked whether
of skilled personnel in the industry hinders the application the risk team in the Indian insurance sector challenged the
of the latest technology. Companies must train their exist- first line enough; 68% agreed, 26% were neutral, and 7%
ing teams with specific skills. The challenges of risk manage- disagreed. This does not clarify enough that risk function
ment skilled resources remain within the Indian insurance challenges the first line enough.
industry. This is primarily driven by the lack of risk manage-
ment education at the business school level and inadequate Risk-based decision making
risk management training at the Company level. Risk-based decision-making is one of the key elements of

enterprise risk management. In this regard, McKinsey's re-
One interview question was asked of Indian respondents port stated that 100% of respondents agreed that European
about the organisation's support for risk management edu- insurers have risk teams involved in risk-based decision-mak-
cation. The response was a lack of incentive from the man- ing. Among Indian insurers, this is a weaker area, where only
agement to pursue risk management education. Another 58% of respondents agreed.
question was asked to the Indian respondents: whether
"Significant time and resources are allocated to risk man- Relationship with stakeholders
agement training or skills building." Only 39% of respondents
It is important for the Chief Risk Officer (CRO) to manage
agreed with the question, and 34% remained neutral. The
the relationship with key stakeholders such as the CEO,
respondents were also asked whether they were trained to
CXOs, Board members, and other members. In this regard,
utilise risk assessment tools and outputs appropriate for
83% of respondents agreed with European insurers, whereas
their role in risk assessment. In response to this question,
75% agreed with Indian insurers.
52% of respondents agreed.
Risk Communication
The talent problem remains the same between Indian and
European resources. One key possible reason for this prob- Another key role of the CRO is communicating the
lem is inadequate risk management education at the un- company's risk position to key stakeholders. European re-
spondents agreed with 33% of this question, while Indian
dergraduate and postgraduate levels in core subjects.
respondents agreed with 65%.
Data Issue
Veto Power
McKinsey's report stated that increasing data, analytics, and
data interconnectivity across products and platforms is criti- McKinsey's report discussed the existence of veto power on
cal to improving cyber risk preparedness. Data is paramount essential decisions for CROs, and 34% of respondents
agreed. In 17% of cases, the company changed the deci-
for the Indian insurance industry in applying insurance and
risk analysis, and it is becoming key for the application of
artificial intelligence. The Indian risk function was asked
whether they quickly got data from the first line for risk
analysis. Many respondents reported challenges in getting
the data from the first line; therefore, they recommended
the establishment of a centralised database to fetch the
information directly.

Independent View on the first line

McKinsey's report stated that the risk team should under-
stand the insurance companies' key risks, credibly challenge
internal policies, procedures, objectives, and performance,
and provide the board and executive team with an indepen-
dent view of the first line's program, including its testing.
One key risk management role is to challenge the first line

16 February 2025 The Insurance Times