The one quality all sporting champions share is the willingness to learn and improve. It is less common across much of the business landscape however, so leaders across (re)insurance would do well to take note.
Take Tiger Woods, for example. Alongside hours of gruelling training and practice, what helps make him one of the greatest golfers of all time is his openness to listen and take on new ideas.
“It’s fascinating that even Tiger Woods has always had a golf coach,” says Pete Chandler, president and CEO of BMS Re US. “He’s always looking to get better and he’s always reaching out to others for advice, input and what he can do differently to get better.”
Personal challenges aside, it’s hard to argue with the logic that taking on new ideas has helped Woods’ overall performance. In 2019, after a decade of well-documented struggles, he worked with a range of specialists to get back where he needed to be and scoop the US Masters.
“Hopefully, leaders are smart enough to realise that there are still coaching and learning opportunities, and that should be continuous and never-ending throughout our careers,” Chandler adds. “It’s important to ask the right questions and not just ask why, but [also] if we do this, what should we expect as the outcome?”
For Chandler, who took on his current role at the start of a challenging 2020, “there is no way you can do the same thing today that you did yesterday to move your organisation forward or, more importantly, take care of your clients and that really has to be the centre of our universe”.
Just learning for learning’s sake is not going to keep you on top of things. Picking up targeted knowledge and skills is the key for leaders in (re)insurance. And if this year taught the sector anything, it was that operations had to be in top shape.
Operational resilience
The Financial Conduct Authority’s consultation on building operational resilience ushered in a new focus on systemic risks to the insurance sector, similar to the focus on banking systems in the past few years, according to Michael Sicsic, former head of supervision for the general insurance retail sector at the regulator.
“It will be mandatory for insurers and brokers to measure and mitigate against disruption by the end of 2021,” Sicsic notes. “That’s closer than you think.”
While many firms have begun work on this project, those that haven’t need to start soon.
“First firms must identify what constitutes an important business service – the collapse of which would pose a risk to the sector, a firm’s safety and soundness, or could cause intolerable levels of harm to consumers,” the former regulator explains. “From there, commence a project to collect baseline data, define what level of disruption would be tolerable, scenario test, and plan.”
Covid-19 has brought operational resilience into rapid, sharp focus, according to Matt Kimber, chief risk officer, Aon UK — and provided a steep learning curve.
“The pandemic has been a really short, sharp shock for organisations and that’s important, because, unlike something that you can plan for, even if everybody is still scrambling to the finish line, you’ve still had time to plan what it’s going to look like,” he explains. “Normally, you’re able to adjust processes and systems, and even people’s mindset in terms of how to deal with specific pieces of business.”
The last year has been very different.
“Everybody realised a pandemic was possible, but did they think it was going to hit and were they prepared? Had they upskilled themselves to deal with the event as it hit? No,” he concludes.
As his role suggests, Kimber has worked within Aon on all elements of risk management in 2020 – but not had to focus on the technical capability, which has not really changed since the start of the year.
“The risk management horizon for many people was dramatically reduced for around three months or so,” he says. “I saw it as part of my role to try and extend that horizon back out again.”
In early summer, Kimber ran three big risk workshops on climate change.
“We talked about what we were doing as a firm around climate change, what we could do from a governance perspective, and the last thing was around our clients and our product offerings around it,” says Kimber.
The timing was deliberate. It helped colleagues of all seniorities extend their view from the short-term anxieties that were around them. “It got tremendous engagement,” he adds.
While a useful exercise to focus the mind, this should also prepare Aon – and others that followed a similar programme – for what lies ahead.
Climate change
“For many organisations, coronavirus came as a shock. It shouldn’t have,” says Sicsic. “A global pandemic has been high on the risk list for microbiologists, virologists, and business contingency planners for some years.”
Climate change is on the same list, and let’s not forget how high it is on the Prudential Regulation Authority’s (PRA) agenda, too. The PRA has set a deadline of the end of 2021 for insurers to fully embed the climate-related financial risk in their modelling. If companies in the financial sector have not started addressing this now, they should do so with haste.
“Climate change is not just about more extreme weather events,” Sicsic explains. “It is also not just about a transition in the form of a higher carbon tax. Even more than the coronavirus pandemic, climate change will create economic, financial and societal shocks. It will change our appreciation of value, investment and risk.”
(Re)insurers do not – in the eyes of the regulator anyway – need to be ready to anticipate these shocks just yet, but they need to start thinking about and working on them.
“This is a necessity if we don’t want to go through the unpreparedness of 2020 again,” adds Sicsic.
Culture Club
Culture is also in the sights of financial regulators, who are still trying to clear up after the last financial crisis. But rather than cause alarm about what quickly needs to change, Covid-19 may have unintentionally done the sector a favour.
Kimber has worked from home, on and off, for decades. He also travels a lot with the job. But when in the office, he sits within three feet of the CEO and the COO, constantly talking between themselves.
“Now, the physical separation is very interesting and has been entirely underestimated,” he says. “At the start of lockdown, I was on my own personal journey, trying to get used to it, as well as everybody else.”
The difference for Kimber was that, in a leadership role, he had to constantly think about his team.
“What they were thinking, how they were beginning to operate and what they needed, and going through the same thing at the same time,” he says.
Very early on in lockdown, Kimber adopted a weekly WebEx meeting with his sizeable team.
“I operated on a brutal truth principle,” he says. “I talked a lot about what I was going through and some of the impact Covid-19 had on my working day. I was just very honest about what was going on in my head and what we were trying to do as a company to make it a little easier.”
This brutal truth approach worked, with team members feeling able to speak up. It’s something to be retained going forward.
Kimber sees this as an extension to Aon’s work on improving mental health provision within the workplace, including a range of skills and services and a mental health coordinator on his team.
Improving culture and personnel operations is one of the most important lessons this leader has learned over the pandemic – and he encourages others to do the same.
“We now have a once-in-a-lifetime opportunity to create a new normal,” he says. “We have been talking about it for a long period of time – about how to capture that moment for the organisation, our colleagues and for our clients. Now we can do it. We can build our working culture back better, so it works for everyone.”
