What’s worrying financial institutions?
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THE DEEP-ROOTED interconnectivity at the very heart of risk has perhaps no better viewing platform than that presented by the FI insurance market. FI is a delicate ecosystem, notes Walid Youssef, head of financial institutions at Travelers Europe, and one that is affected by a broad range of macro factors – whether political, economic, social, or, in the instance of COVID, a combination of them all.
“Nothing else compares to FI in terms of having to have your finger on the pulse all the time,” he says. “It’s so varied, and it’s a constantly moving landscape, but that keeps it all fresh and challenging. And if you don’t feel challenged when you wake up in the morning, then what’s the point?”
What’s on the minds of FIs right now?
You can broadly divide the top challenges currently facing FIs into four categories, Youssef says – inflationary issues, cyber concerns, the war for talent, and ESG risk.
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“The whole landscape for FIs is exceptionally challenging, particularly when you take into consideration that they've gone through the stress of COVID. It’s stress on top of stress”
Walid Youssef,
Travelers Europe
Inflation, which is at its highest peak in 40 years, is a critical pain point facing FIs and is affecting the cost of doing business. In addition, unfolding political pressures are causing significant supply-chain issues. Increasing global prices for food, services, and commodities are the result of the high inflation seen across economies. Combined, these factors are influencing everything from staff (via the current cost-of-living crisis) and overheads (increasing the cost of doing business) right through to servicing debt (with interest rates rising to combat inflation).
“The whole landscape for FIs is exceptionally challenging,” Youssef says, “particularly when you take into consideration that they've gone through the stress of COVID. It’s stress on top of stress, and we haven’t even fully seen the pressure ease off from the COVID piece yet.”
Cyber risk remains a top concern for FIs on which Travelers Europe keeps a very close eye, to ensure that insureds recognise the key exposures they should be monitoring. Ransomware attacks have been rife over the last few years, and while these haven’t translated into a huge number of claims across Travelers’ FI book to date, they remain squarely on its risk radar.
“We like to [have] discussions with our insureds to make sure that they have the mitigants in place to deal with any of those attacks, so they can be proactive when it comes to cyber risk,” Youssef says. “I think that's the most important thing.”
From Travelers’ ongoing dialogue with its insureds, it has seen that staffing – both attracting and retaining talent – remains a weighty concern. Overall, 2022 has seen the market settle slightly, but it is still a present risk that all financial institutions need to monitor and manage.
“There's a big grey area as to what an effective working model is now,” Youssef says. “That’s around hybrid working models, but also around businesses questioning whether they really need to have an office or can go completely remote – which obviously has inherent exposures from an insurance perspective. Approximately 70 UK businesses are undergoing the largest trial of a four-day working week, with no reduction in pay.
“The trade-off is to maintain 100 per cent productivity across the business for 80 per cent of the time previously worked. Iceland had previously trialled the same, citing no drop in productivity and overall increases in employee wellbeing. Whilst adoption may take time (should the findings drive change), financial institutions – asset managers, for example – may need to consider the implications of productivity where there are fewer trading opportunities.
“The oversight and governance of people who are working remotely (or less) could translate into an increase in PI-related claims around negligence, etc. But overall, I do think at the moment this [staffing piece] has gone slightly on the back burner because of all the macro factors affecting the FI space at this time.”
ESG risk sees several of these macro factors converge at once, and through 2021 into 2022, Youssef has seen ESG rising to the senior ranks of the risk exposures facing FIs. Media reports and other scrutiny have turned the spotlight on environmental disclosures, with allegations of greenwashing or otherwise unsubstantiated ESG declarations representing a concern FIs need to face head-on.
Youssef and his team work with FI clients to ensure that any statements their insureds make are accurate, achievable, and being actively worked toward. They also engage with clients to gain a full understanding of how ESG is culturally integrated into their insureds’ frameworks, as otherwise ESG is just words on a page.
“It’s incredible, but you can’t have conversations in isolation about the challenges facing FIs, as they are all very much commingled,” he notes. “Whether it’s inflation, cyber-related risk, the ESG question, or the staffing issue, you can’t mention one without bringing the others into the fray as well. So it’s a very challenging environment at the moment.”
Problem-solving the challenges facing FIs
With these challenges come opportunities for insureds to implement the right procedures to mitigate the impact of these issues. Greater frequency of risk management and executive reviews is required to navigate the current environment in real time. Businesses need not be afraid of innovation, Youssef says, and should endeavour to understand how the right processes and products can mitigate the difficulties they are facing.
“What we do to support our clients is early engagement,” he says. “We’ve always been big advocates of face-to-face insurer meetings to ensure that we understand our clients' business fully and that we can provide an insurance programme that works for the inherent exposures they’re facing at the moment.
“Generally speaking, brokers are doing a great job of articulating clients’ needs through to their insurers, and in connecting the insurer and the insured, with themselves as the go-between”
Walid Youssef,
Travelers Europe
“It’s very much a two-way conversation. We need to make sure we’re comfortable that the financial institution is managing its risk appropriately, and they need to be supported via constant dialogue and engagement, and our proactive approach to providing [solutions].”
As a former broker himself, Youssef never underestimates the role of the broker in facilitating that two-way conversation. Particularly in recent years as corrections in the FI market reflect historical under-pricing meeting claims inflation, the brokers’ role in communicating with clients and insurers alike has become more critical than ever.
“Generally speaking,” Youssef says, “brokers are doing a great job of articulating clients’ needs through to their insurers, and in connecting the insurer and the insured, with themselves as the go-between. Brokers have embraced Travelers’ critical messaging around the role of early engagement in creating a healthy FI insurance ecosystem. And this engagement only becomes more critical amid challenging market conditions where brokers may have difficult messages to share with clients.”
“It's not a reactive measure anymore. I think brokers are really proactive in making sure that they're engaging with both their clients and us at a much earlier stage in the renewal process, just to ensure that everybody is on board, everybody is on side, and there is full and complete transparency within the process. And that needs to continue, especially when we're going through these periods of significant uncertainty.”
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Copyright © 2022 Key Media
People
Terms & conditions
Privacy policy
Conditions of use
About us
Contact us
RSS
Asia
NZ
AU
CA
US
UK
contact us
specialty
Best Insurance
Resources
RISK MANAGEMENT
News
Copyright © 2022 Key Media
People
Terms & conditions
Privacy policy
Cookie policy
Conditions of use
About us
Contact us
RSS
Asia
NZ
AU
CA
US
UK
contact us
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Resources
RISK MANAGEMENT
News
1. Inflation
Top 4 concerns for Financial Institutions:
2. Cyber risk
3. Talent attraction
and retention
4. ESG
“Generally speaking,” Youssef says, “brokers are doing a great job of articulating clients’ needs through to their insurers, and in connecting the insurer and the insured, with themselves as the go-between. Brokers have embraced Travelers’ critical messaging around the role of early engagement in creating a healthy FI insurance ecosystem. And this engagement only becomes more critical amid challenging market conditions where brokers may have difficult messages to share with clients.”
“It's not a reactive measure anymore. I think brokers are really proactive in making sure that they're engaging with both their clients and us at a much earlier stage in the renewal process, just to ensure that everybody is on board, everybody is on side, and there is full and complete transparency within the process. And that needs to continue, especially when we're going through these periods of significant uncertainty.”
“It’s very much a two-way conversation. We need to make sure we’re comfortable that the financial institution is managing its risk appropriately, and they need to be supported via constant dialogue and engagement, and our proactive approach to providing [solutions].”
As a former broker himself, Youssef never underestimates the role of the broker in facilitating that two-way conversation. Particularly in recent years as corrections in the FI market reflect historical under-pricing meeting claims inflation, the brokers’ role in communicating with clients and insurers alike has become more critical than ever.
Problem-solving the challenges facing FIs
With these challenges come opportunities for insureds to implement the right procedures to mitigate the impact of these issues. Greater frequency of risk management and executive reviews is required to navigate the current environment in real time. Businesses need not be afraid of innovation, Youssef says, and should endeavour to understand how the right processes and products can mitigate the difficulties they are facing.
“What we do to support our clients is early engagement,” he says. “We’ve always been big advocates of face-to-face insurer meetings to ensure that we understand our clients' business fully and that we can provide an insurance programme that works for the inherent exposures they’re facing at the moment.
Cyber risk remains a top concern for FIs on which Travelers Europe keeps a very close eye, to ensure that insureds recognise the key exposures they should be monitoring. Ransomware attacks have been rife over the last few years, and while these haven’t translated into a huge number of claims across Travelers’ FI book to date, they remain squarely on its risk radar.
“We like to [have] discussions with our insureds to make sure that they have the mitigants in place to deal with any of those attacks, so they can be proactive when it comes to cyber risk,” Youssef says. “I think that's the most important thing.”
Inflation, which is at its highest peak in 40 years, is a critical pain point facing FIs and is affecting the cost of doing business. In addition, unfolding political pressures are causing significant supply-chain issues. Increasing global prices for food, services, and commodities are the result of the high inflation seen across economies. Combined, these factors are influencing everything from staff (via the current cost-of-living crisis) and overheads (increasing the cost of doing business) right through to servicing debt (with interest rates rising to combat inflation).
“The whole landscape for FIs is exceptionally challenging,” Youssef says, “particularly when you take into consideration that they've gone through the stress of COVID. It’s stress on top of stress, and we haven’t even fully seen the pressure ease off from the COVID piece yet.”
THE DEEP-ROOTED interconnectivity at the very heart of risk has perhaps no better viewing platform than that presented by the FI insurance market. FI is a delicate ecosystem, notes Walid Youssef, head of financial institutions at Travelers Europe, and one that is affected by a broad range of macro factors – whether political, economic, social, or, in the instance of COVID, a combination of them all.
“Nothing else compares to FI in terms of having to have your finger on the pulse all the time,” he says. “It’s so varied, and it’s a constantly moving landscape, but that keeps it all fresh and challenging. And if you don’t feel challenged when you wake up in the morning, then what’s the point?”
What’s on the minds of FIs right now?
You can broadly divide the top challenges currently facing FIs into four categories, Youssef says – inflationary issues, cyber concerns, the war for talent, and ESG risk.
“Generally speaking,” Youssef says, “brokers are doing a great job of articulating clients’ needs through to their insurers, and in connecting the insurer and the insured, with themselves as the go-between. Brokers have embraced Travelers’ critical messaging around the role of early engagement in creating a healthy FI insurance ecosystem. And this engagement only becomes more critical amid challenging market conditions where brokers may have difficult messages to share with clients.”
“It's not a reactive measure anymore. I think brokers are really proactive in making sure that they're engaging with both their clients and us at a much earlier stage in the renewal process, just to ensure that everybody is on board, everybody is on side, and there is full and complete transparency within the process. And that needs to continue, especially when we're going through these periods of significant uncertainty.”
“It’s very much a two-way conversation. We need to make sure we’re comfortable that the financial institution is managing its risk appropriately, and they need to be supported via constant dialogue and engagement, and our proactive approach to providing [solutions].”
As a former broker himself, Youssef never underestimates the role of the broker in facilitating that two-way conversation. Particularly in recent years as corrections in the FI market reflect historical under-pricing meeting claims inflation, the brokers’ role in communicating with clients and insurers alike has become more critical than ever.
Problem-solving the challenges facing FIs
With these challenges come opportunities for insureds to implement the right procedures to mitigate the impact of these issues. Greater frequency of risk management and executive reviews is required to navigate the current environment in real time. Businesses need not be afraid of innovation, Youssef says, and should endeavour to understand how the right processes and products can mitigate the difficulties they are facing.
“What we do to support our clients is early engagement,” he says. “We’ve always been big advocates of face-to-face insurer meetings to ensure that we understand our clients' business fully and that we can provide an insurance programme that works for the inherent exposures they’re facing at the moment.
Cyber risk remains a top concern for FIs on which Travelers Europe keeps a very close eye, to ensure that insureds recognise the key exposures they should be monitoring. Ransomware attacks have been rife over the last few years, and while these haven’t translated into a huge number of claims across Travelers’ FI book to date, they remain squarely on its risk radar.
“We like to [have] discussions with our insureds to make sure that they have the mitigants in place to deal with any of those attacks, so they can be proactive when it comes to cyber risk,” Youssef says. “I think that's the most important thing.”
Inflation, which is at its highest peak in 40 years, is a critical pain point facing FIs and is affecting the cost of doing business. In addition, unfolding political pressures are causing significant supply-chain issues. Increasing global prices for food, services, and commodities are the result of the high inflation seen across economies. Combined, these factors are influencing everything from staff (via the current cost-of-living crisis) and overheads (increasing the cost of doing business) right through to servicing debt (with interest rates rising to combat inflation).
“The whole landscape for FIs is exceptionally challenging,” Youssef says, “particularly when you take into consideration that they've gone through the stress of COVID. It’s stress on top of stress, and we haven’t even fully seen the pressure ease off from the COVID piece yet.”
THE DEEP-ROOTED interconnectivity at the very heart of risk has perhaps no better viewing platform than that presented by the FI insurance market. FI is a delicate ecosystem, notes Walid Youssef, head of financial institutions at Travelers Europe, and one that is affected by a broad range of macro factors – whether political, economic, social, or, in the instance of COVID, a combination of them all.
“Nothing else compares to FI in terms of having to have your finger on the pulse all the time,” he says. “It’s so varied, and it’s a constantly moving landscape, but that keeps it all fresh and challenging. And if you don’t feel challenged when you wake up in the morning, then what’s the point?”
What’s on the minds of FIs right now?
You can broadly divide the top challenges currently facing FIs into four categories, Youssef says – inflationary issues, cyber concerns, the war for talent, and ESG risk.