After a busy year in financial services, our Risk Management Practice Committee (RMPC) revisit the major emerging trends of 2019, and how the RMPC is meeting the challenges head on.
Susan Looi, the Convenor of the RMPC is joined by the Deputy Convenor Liz Baker. Together they talk about the legislative changes arising from the Financial Services Royal Commission last year, emerging risk management practice issues, and what’s in store for 2020.
Susan started off by introducing herself and Liz to the audience, reiterating the broad set of skills the RMPC draws from its members in life insurance, general insurance, health, banking, insurtech and marketing analytics.
The Royal Commission
Liz then gives a brief overview of the major legislative developments that came out of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Liz Baker during the recording of the RMPC Practice Update Podcast.
The Royal Commission exposed a range of problems throughout the industry, including the “Fees for no service” issue. The Federal Government has introduced several major pieces of legislation in response to the Royal Commission’s final report – changes to unfair contract terms, anti-hawking laws and claims as a financial service, amongst others.
The risk management themes arising from these developments – Governance, Remuneration, Accountability and Culture (GRAC) – are increasing focus of the executive level and Boards.
“Several institutions have seen their non-financial risks, such as the management of anti-money laundering or ‘fees for no service’, turn into very significant financial risks with large fines and in some cases court proceedings,” Liz said.
The likely impact on actuaries is becoming clearer – actuaries will be expected to contribute to the effective management of non-financial risks.
But there are other issues the RMPC is grappling with apart from only the fallout from the Royal Commission, including climate risk stress testing for APRA-regulated companies, cyber risk practices, and data privacy issues.
A proactive approach
In light of these developments, both Susan and Liz agree that increased risk management education is a necessity, and the RMPC is undertaking several reviews of professional standards, as well as accrediting tertiary risk management courses. The team is also contributing to the new risk management course, planned for release by the Actuaries Institute in 2022.
The RMPC undertook some important work in furthering risk practice education last year with several papers presented at the Actuaries Summit on the subject of the impacts of technology on risk management, data and ethics, an insurance risk forum for CROs and a session for students at the Young Actuaries Conference.
As 2020 gathers steam, the team will continue to tackle the emerging area of non-financial risk management, with a paper to be presented at the upcoming 20/20 All-Actuaries Summit in June, and further Insight sessions in Sydney and Melbourne.
“We can actually contribute a lot I think, as a profession, to non-financial risk management including development of risk appetites and key risk indicators, and data analytics around non-financial risks,” Susan says.
Any Actuaries Institute members with an interest in getting involved in risk management matters are encouraged to volunteer, attend an Insight session, or visit the microsite on the Actuaries Institute website.
Hear more about how to get involved and more 2019 achievements from the RMPC. Listen to the full podcast.
CPD: Actuaries Institute Members can claim two CPD points for every podcast listened to.