Commercial Risk Europe — November 2013

GLOBAL

Airmic set to deliver Axco-bAsed globAl progrAmme compliAnce solution in 2014Ben [email protected]

[london]—In partnershIp with axco, the insurance information specialists, airmic expects to deliver a solution for members struggling with compliance issues on global programmes by the middle of next year.

however, its plans for a market-wide database involving the input of leading international insurers are still up in the air. Discussions with the market are ongoing and airmic expects to know shortly whether there is appetite amongst insurers for such an initiative.

BRoKER SIGn-UPairmic announced in October that three more brokers have signed up to an airmic-led compliance database for global programmes run by axco.

speaking to Commercial Risk Europe, John hurrell, airmic’s Chief executive, explained that JLt, Lockton and aJ Gallagher have joined aon, Willis and Marsh

FERMA FORUM 2013 EXTRA: Risk managers in Maastricht were urged to underline their value to the bottom line of their companies and additionally how to address cyber risks & opportunities ........p10

Commercial Risk EuropeEUROPEAN INSURANCE & RISK MANAGEMENT NEWS

www.commercialriskeurope.comVolume 4/ Issue 9/ NoVember 2013

THE LONG GAME: Dr Axel Theis spoke to CRE and underlined the need for AGCS to continue its long-term plan of investment in global programme capabilities ............................................p12

JO WILLAERT, AGFA-GEVAERT: CRE spoke to newly-elected Ferma vice president Jo Willaert about his risk management philosophy and objectives for the federation in his new post ................p11

Ben [email protected]

[maSStRIcht]—FolloWinG TWo years of discussion with member associations Ferma has announced that its pan-European risk manager certification scheme is to go ahead and has wasted no time in setting about delivering and fleshing out its ambitious plans.

Speaking to Commercial Risk Europe, Julia Graham, President of Ferma and a member of its certification steering group, said the federation is already devising the core competencies upon which certification will be based, reiterated that Ferma will not provide education itself and noted the federation

may need to work with a third party to deliver certification.

Meanwhile leading national risk management associations have moved to back the scheme, but noted that delivering valuable and credible risk manager certification will be no easy task.

Having assured member associations that they will play a major role in developing and potentially delivering pan-European certification, Michel Dennery, Vice President of Ferma, announced at the Ferma Forum in Maastricht that the federation has been given the green light

to deliver pan-European risk manager certification.

“There have been different points of view but we have now moved on—we are decided—and now it’s time to get on

with it,” he said. Ms Graham

explained further: “We have done a lot of homework on what certification might look like and what our associations want. We have listened,

looked at a number of different potential business models and having done the groundwork we have now taken a decision at the Ferma board level to ‘go’ and to move from the research to the planning

stage for a pan-European certification, which is a big hurdle to overcome.”

Under the scheme Ferma stresses that it will not become a provider of education. Rather it will establish a framework to allow certification of learning programmes run by associations, commercial education bodies, institutes and universities.

‘BooSt StandInG’The Ferma certification stamp of approval will then boost the standing of eligible education offerings, said Ms Graham.

“Some learning will come up to standard, some will partly come up to standard and some will not come up to standard. The certification standard will however give learning providers,

professionals and students an idea of what ‘good’ looks like and an idea of what they need to do, or strive towards, to achieve and maintain the Ferma certifiable standard. What is clear is we

want something that has international re-cognition,” explained Ferma’s new presi-dent.

The federation is currently in the pro-cess of developing the minimum standards, or framework, of

qualifications and training that it will deem required for certification.

Ferma pushes on with certification plans after conference green light

CERTIFICATION: turn to p18

By Adrian [email protected]

[BRUSSElS]—A kEy EURoPEAn Parliament committee has voted overwhelmingly in favour of the European Commission’s data protection reform proposals, which could see companies that abuse customer data fined up to 2% of worldwide turnover per incident.

The proposed regulation is designed to give European individuals far greater control over use of their data. Under the package, for example, simply not replying to a request to use data will no longer mean yes.

European risk managers will have to step up communication efforts with iT, HR and marketing departments to ensure that they are fully aware of the coming new rules to avoid costly damage in terms of fines and reputation if they wittingly or unwittingly breach the regulation.

‘PacKaGE BacKEd’The package was backed late last month by an overwhelming majority (49 votes in favour, 1 against and 3 abstentions) in the Committee for Civil liberties, Justice and Home Affairs (liBE) of the European Parliament.

The Commission said that the reports of MEPs Jan-Philipp Albrecht and Dimitrios Droutsas, on which

members of the liBE Committee voted, were a ‘strong endorsement’ of its package approach to the data protection reform, and an ‘important signal of progress’ in the legislative procedure.

“The vote by the European Parliament’s leading committee is a strong signal for Europe. it paves the way for a uniform and strong European data protection law that will cut costs for business and strengthen the protection of our citizens: one continent, one law,” said Vice-President Viviane Reding, the EU’s Justice Commissioner.

“The European Parliament has proven that excessive lobbying can be counter-productive. it has not only defended but strengthened the right to be forgotten for citizens—one of the central elements of the EU data protection reform. This is democracy

in Europe at its best. Thanks to the committed and tireless work of Members of the European Parliament Mr Albrecht, Mr Voss and Mr Droutsas, the European Parliament has succeeded in consolidating 3999 amendments into just 104 compromise amendments. This is a solid text. it is now for the Council of Ministers, the EU’s second Chamber, to rise to the challenge.”

The liBE Committee gave its strong backing to the architecture and the fundamental principles of the Commission’s data protection reform proposals, on both the General Data Protection Regulation and on the Data Protection Directive for law enforcement situations.

REFoRm PRocESSThe liBE vote gives a mandate to the Rapporteurs to now negotiate with the Council of the EU.

on 7 october ministers in the Council discussed the data protection reform and reached an agreement in principle on the ‘one-stop-shop’ mechanism.

The next meeting of Justice Ministers on the data protection reform will take place in early December.

The European Parliament vote comes ahead of an important discussion by heads of state and government at the European Council of 24–25 october on

EC: turn to p18

CERTIFICATION

GLOBAL: turn to p16

viviane reding

isabel martinezpierre sonigo marie-gemma dequae

EUROPEAN COMMISSION

EC data protection reform takes big step forward: companies face fines of 2% worldwide turnover

CYBER

cyber bi cover on the table as european market hots upStuart [email protected]

[ l o n d o n ] — i n S U R E R S A R E increasingly willing to offer cover for cyber-related business interruption (Bi) exposures as the industry looks to meet the needs of European and international companies.

in recent weeks, brokers in the london market have been marketing a new business interruption policy that covers physical damage caused by an attack on so-called SCADA systems, the automated control systems used in critical infrastructure and manufacturing.

VUlnERaBIlItYThese computer controlled systems, which remotely operate equipment in industries ranging from energy to brewing, have been shown to be vulnerable to cyber attacks, software glitches or simple human error, potentially resulting in large property and Bi losses.

Since the Stuxnet computer worm, supposedly developed by the US to disrupt the iranian nuclear programme,

CYBER: turn to p16

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NEWS 3Baden-Baden meeting 2013

Risk transfer industry concedes it is failing corporate buyers[baden-baden]—The sTance being taken by reinsurers in the run-up to renewals is usually a good indication of what might be in store for underlying insureds. as such the baden-baden reinsurance meeting, held towards the end of October, is usually considered a bellwether for european corporations thinking about how much their own big risk programmes are going to cost.

but this year’s networking event kicked off with an animated panel discussion not about prices but rather how insurers and reinsurers are failing their big corporate customers.

speaking on the sidelines of the symposium, which was hosted by guy carpenter, the reinsurance intermediary’s head of eMea strategy chris Klein said that although catastrophes and alternative capital had dominated the headlines, insurers had other challenges. “We thought companies ought to be more focused on finding profitable growth. That’s why we chose to look at how the industry could deploy its excess capital by widening the insurance market,” Mr Klein said.

PReMIUM MISMaTCHat the symposium, panel speakers shared the view that the insurance and reinsurance industry felt challenged by the lack of premium growth, especially in mature markets. but risk carriers are actually missing out on opportunities because they are failing to provide clients with all the cover they need, the panel agreed.

Paul horgan, global head of group Reinsurance and casualty Underwriting at Zurich, told the audience that feedback he received from corporate insurance buyers indicated serious insurance industry short-comings. he said they felt that only around 20% of their risks can be insured, citing demand for supply chain and outsourcing risk transfer coverages. “The industry needs to get to grips with non-physical risks and that

means obtaining better data,” Mr horgan said.Lloyd’s head of Underwriting Tom bolt

agreed. “There’s sufficient capital but the industry is only interested in a few lines of business. Why not find other opportunities,” he said. Mr bolt pointed out that the Thai floods, which caused massive ‘unmodelled’ business interruption losses, highlighted an opportunity for the risk transfer industry. “We need to address this sort of exposure in a consistent way. it is an opportunity to do something new and original,” he said.

Mr bolt urged insurance underwriters to take note of frequent risk manager surveys that rank their perceived problem areas. “Look at any emerging risk list. corporations can identify these risks, that’s a start for insurers. Let’s have a little more dialogue between buyer and insurer,” he said.

Munich Re’s board member Torsten Jeworrek agreed [pictured, above, inset], saying that the corporate risk landscape is changing and that insurers need to respond by devising new solutions—to protect intangible assets, for example.

Mr Jeworrek pointed out that although there is a strong increase in the number of ‘new technology’ companies in the global Top 100 ranking, insurers still consider old technology companies as their biggest customers. echoing Mr horgan’s comments on insurers’ lack of innovation he cited a conversation he had with an executive at media group bertelsmann who told him that it only had insurance coverage for 8% of all the risks it could identify.

but Mr Jeworrek did sound one note of scepticism over insureds’ take up of new and innovative coverages. he said that in the aftermath of the icelandic ash cloud, Munich Re had offered a contingent business interruption coverage to the aviation industry. The only problem was that ‘they wanted it for free’, Mr Jeworrek said.

speaking at the event Luca albertini, chief executive of the iLs fund manager Leadenhall capital, suggested that alternative capital might have a bigger role to play in providing risk transfer for certain business risks. “i believe that [capital markets] investors can underwrite unmodelled perils, but they still need to have good data,” he said. “some investors are entering non-cat perils such as marine, energy and space, for example.”

guy carpenter’s sunday symposium is a curtain raiser for the discussions that take place over the following two to three days in the hotel lobbies and cafes of the german spa town baden-baden. an over-riding concern voiced by many reinsurers is the reduction in ceded reinsurance premiums available to them.

ReTenTIOn TRendSaspen Re’s Managing Director of europe, Jacopo d’antonio, said the large insurance groups are increasingly centralising the purchase of reinsurance and at the same time there is a general trend to increase retention levels. “Then there is the growing involvement of the capital markets in the cat business, which reduces the share of traditional reinsurers to an extent,” he said.

amer ahmed, head of allianz Re, is responsible for both incoming and outgoing reinsurance transactions for allianz se. his unit’s assumed reinsurance amounts to around €4bn, one tenth of which is from non-allianz clients.

he said that the allianz share is growing, reflecting the trend in the wider market for big groups to centralise their reinsurance protections and also to buy less.

“There is a discernible trend among big and small insurers to increase retentions as companies examine their reinsurance needs more broadly than they used to,” Mr ahmed said. “We ourselves have taken a more portfolio-

wide view and asked ourselves how reinsurance can support the group’s needs through higher retentions. We can support individual business units from within.”

Mr ahmed believes that reinsurance companies will have to adjust their business model accordingly, emphasising expertise to clients rather than just commoditised capacity. “it will no longer be a case of ‘here’s a cat programme, do you want a 5% share’. instead reinsurers will have to come up with more customised solutions to insurers’ needs,” he said.

nat cats were also on reinsurers’ minds. although on face value 2013 has been a relatively benign year for natural disasters, Munich Re’s board member Ludger arnoldussen said insured losses so far this year totalled €8bn, compared to the ten year average of €6bn. “The flood event in central europe compares with what happened in 2002—it means we have effectively had two ‘centennial’ events in around 10 years,” he said.

summer hailstorms resulted in insured losses of €2.5bn and Mr arnoldussen drew attention to the august event which saw hailstorms the size of tennis balls pound 28,000 brand new Volkswagens parked at the manufacturer’s Wolfburg factory.

Mr arnoldussen said that with nat cat severity and frequency growing in europe, some cedants should brace for inevitable reinsurance cost ‘effects’. in the immediate future, Munich Re expects a largely stable renewal at 1 January with the exception of germany where significant nat cat losses will have to be reflected at the renewal outcome.

it is a complicated renewal picture but in a speech to the market on Tuesday night Lloyd’s Mr bolt deftly summed up the market in just seven words—soft cycle, low interest rates, over capitalised. he added two words of advice: be careful.

—Garry Booth, Editor of Reactions, Baden-Baden Reporter

NEWS4 Julia Graham, Ferma President


[maastricht]—Julia Graham, Director of risk management and insurance at the global law firm Dla Piper, was elected as Ferma’s new president at the federation’s recent forum in maastricht.

Previously a vice-president of Ferma and currently a board member, she took over the reigns from Jorge luzzi and has wasted no time in setting about her new task of leading the Federation of European risk management associations.

She promptly chose three key words that will shape her two years in charge—profession, innovation and diversity.

“These words include a determination to raise the profile and value of the risk and insurance manager profession, having the innovation within our professional community to be able to deal with that and the ‘riskier’ and fast changing world and the need for a more diverse population of people working in the profession to further its cause,” explained ms Graham to Commercial Risk Europe.

innovation is a big theme within the world of risk management. under ms Graham’s leadership Ferma will continue to focus on pushing insurers and intermediaries to deliver innovation through contract wordings, risk transfer options and value added solutions.

But the Ferma president believes risk managers themselves must also embrace new thinking and competencies to deal with many of the increasingly complex and emerging risks.

“it is not good enough to say you are reluctant to talk about a subject because it is complicated or unfamiliar. risk managers must equip themselves and know enough about a particular subject. So i think risk managers have to be more innovative in their own skill set to deal with the world we live in,” she said.

‘risKiEr WOrLD’While the profile of the risk management profession is increasing it is simultaneously getting harder for practitioners to manage the enterprise-wide set of risks, she warned.

“all of the research i have read supports the broad concept that we are living in a riskier world. i noted some very interesting comments made at the Ferma Forum in maastricht by Thomas hürlimann, CEO of Zurich Global Corporate, who said that in his opinion GDP is not increasing as rapidly as risk and therefore the gap between GDP and risk is growing. So in a time of accelerating change the risk manager has to keep up, and this is a challenge. at the same time much of what is changing are traditionally non-transferable or insurable risks,” she said.

according to research undertaken as part of its roads to resilience project, airmic, the uK risk management and insurance association, concluded that organisations need an exceptional

‘radar’ for risk, leaders that are respected and respectful, the ability to respond rapidly and diversified resources.

“To respond to this scenario, risk managers must develop business leadership skills, become a business discipline and add significant value—or stay as fragmented technical people called upon only when needed. it should be an assumption that we are the lead experts in risk management and/or insurance in our organisations,” argued ms Graham.

adding: “What Ferma is trying to get across is that the risk managers’ job is changing and the bar is getting higher all the time. if you want to be part of that profession you have to be doing things that equip you for the future.”

ms Graham said that Ferma’s certification programme for risk managers, which it announced was going ahead at its forum in maastricht, will form a key platform of her plans to boost the standing of the profession and develop appropriate skill sets.

Ferma’s new president also wants to encourage more diversity within the risk management profession.

For example, ensuring women are better represented and that they can break through the professional ‘glass ceiling’ which still seems to exist and is restricting their rise to the top.

She plans to create a women’s network within Ferma. Further details on this will follow in future editions of Commercial Risk Europe as ms Graham consults her Ferma board colleagues and association members on the matter.

“i have the opportunity as Ferma president to act as a role model…if i don’t do this and act as well as talk, i will have missed an opportunity. i have the profile to make a difference and i intend to use it,” explained the risk and insurance manager on the issue of promoting women in risk management.

But diversity is not only about gender. During her two-year mandate she is also very keen to act as a role model to encourage young professionals to enter risk management as a career choice.

“rather than many of my generation who entered, or even drifted, into the world of risk or insurance via other related professions i would like to see more people choosing it as a profession because they see it as a good thing to do with professional options either in the profession itself, or as a recognised stepping stone to other roles,” said ms Graham.

Developing, coaching and providing opportunities for young risk professionals remains a key Ferma objective. “it is essential as ‘grey hairs’ like me approach the end of our careers that we invest in and leave a legacy for the profession,” said its

president.ms Graham told CrE that

she could not resist taking on the role as Ferma president because of the opportunity to work with and represent like-minded professionals in order to benefit the risk management profession across Europe and beyond.

She also put herself forward for the position because she staunchly believes in what Ferma is doing and has great faith in fellow board members, vice-presidents and the federation’s staff.

“We have such a unique opportunity in Ferma to take a natural lead in relevant European affairs and thought leadership and to bring together the combined force of our association members—including the opportunity to do things that our associations can’t easily do on their own. This prospect and continuing as part of the Ferma journey is very enticing,” she said.

iNtErEstiNG timEs“i am very enthused and looking forward to my time as president. i know it is going to be time consuming and challenging— my predecessor Jorge luzzi wisely advised me about that—but i have never been frightened of hard work. i look to the Ferma office and its board for support. The team is what it is all

about at Ferma. i have a leadership role but the spirit and energy for Ferma comes from the collective energy of our office, board and association members,” she added.

ms Graham believes her 40 years’ experience of working in the ‘fabulous’ risk and insurance business will stand her in good stead as Ferma president. it is a profession that has given her a very varied and interesting career and one in which she takes great pride in being part of.

“i have a lot of experience which i think is helpful in the role, a great global network and i genuinely see it as an opportunity to give something back to the profession. i am passionate about what i do and i really enjoy working in the community with other people that share that view and my line of work,” ms Graham enthused.

having previously been involved with the Business Continuity institute, the Chartered insurance institute (with both of which she continues as a certified member) and more recently airmic, where she was chairman, ms Graham also brings knowledge of how large associations such as Ferma operate.

Despite her uK background, the new Ferma president will make a specific effort not to be uK-centric. “i want to be a true European first and a Brit second,” she said.

as part of that ms Graham will be busy during her two years in office fulfilling her pledge to visit every Ferma member association. “it doesn’t matter how small or big the association is, i want to come and see all of our stakeholders, listen to their needs and expectations and learn from these.”

With risk management across Europe at different stages of maturity, Ferma, under ms Graham’s tenure, will do as much as it can to spread the risk ‘vision and mission of Ferma’.

For smaller associations in particular, which do not have the good fortune of permanent staff and resource, the federation will promote the sharing of knowledge across borders.

“We have an opportunity to increasingly act as a portal to share the great things that our member associations are producing. But this is not to say that only the bigger associations have something good to share,” she said.

The Dla Piper risk manager does not intend to rip up the current objectives and plans at Ferma, but build on work currently underway.

cOLLEGiatE actiON“my objective is not to throw things away or start again but rather to see what we are doing through to conclusion. We may add one or more additional things to our agenda and change how we currently do some things, as evolution and change is good for any organisation, but i am of the mind that what we have is a great agenda. my goal is to continue to put focus and energy behind some well thought through projects, one being certification,” explained ms Graham.

alongside certification and her promise to raise the profile of the profession, drive innovation and increase diversity in the sector, a key focus for ms Graham and Ferma in the coming years will be lobbying at European level.

“We have a powerful opportunity in this area because generally speaking when we talk to the commission they listen to us. We are gaining a very credible reputation and it is very exciting,” she said.

Ferma’s hand has been strengthened by the appointment this year of a full time Eu affairs representative, Julien Bedhouche.

Furthermore, marie-Gemma Dequae, past president of Ferma and today scientific advisor at the federation, is now involved with EiOPa, one of Europe’s three insurance industry supervisory bodies. “again this is a huge step forward for Ferma and to have a voice within EiOPa is important and prestigious for us,’ said ms Graham.

Some of the key areas that Ferma are keeping an eye on at European level include consultation on disaster insurance, insurance tax and corporate governance, she explained.

Beyond Europe, ms Graham is keen to see Ferma grow links with other risk management associations, institutes and professional bodies that share an interest in risk and insurance around the world to further the profession as a whole. This includes working on joint initiatives where possible.

The next two years look set to be a busy time for ms Graham and for Ferma. But it is clear that the new president is raring to go and her enthusiasm can only stand the European risk management community in good stead.

Ready for action

“What Ferma is trying to get across is that the risk managers’ job is

changing and the bar is getting higher all the time. If you want to be part of that profession you have to be doing things that equip you for the future...”

JuliA GRAHAM

SAVE THE DATE!12-13 JUNE, 2014

WESTiN DrAgoNArA rESorT, MAlTA

Julia Graham, Director of risk management and insurance at the global law firm Dla

Piper, was announced as the new president of Ferma during the maastricht Forum and this potentially signifies an important moment for the European Federation of risk management associations.

it is important because the profession, or perhaps more accurately community, currently needs a leader to help it grasp the opportunity presented by economic, political and social circumstance and force itself onto centre stage.

The profession has evolved hugely over the last five years and this has been reflected in the agendas faced by Ferma presidents and what we, at Commercial Risk Europe, have reported on.

When Peter Den Dekker took over the reins as Ferma president from marie-Gemma Dequae in the summer of 2009 he needed to firmly establish the position of the risk and insurance manager at the table with the insurance industry.

REGULATORY CHANGESBig political and regulatory changes were afoot such as Solvency ii, the extension, or otherwise, of the Block Exemption regulation (BEr) and the revision of the insurance mediation Directive (imD) that were all wrapped up in the regulatory reaction to the credit crisis.

historically the insurance industry lobby had been so much better organised, and of course funded, than the diverse and still very nationally-focused risk and insurance management community.

mr Den Dekker used his energy, wit and sheer bloody-minded nature to try and make sure that this balance was redressed.

Thus Ferma managed to make sure that its voice was heard at the European Commission as it drew up the

draft Directive for Solvency ii, ensuring that captives were not completely ignored nor indeed the basic interests of those who it is designed to protect in the first place—the policyholders.

No one in their right mind would argue that Ferma has managed to persuade the commission to seriously take captives into account. There are far bigger fish to fry with this Directive, not least the value of the collective European private pension fund.

But because of the hard work of mr Den Dekker, his team at Ferma and their friends at ECirOa, the European Commission and EiOPa now at least know what a captive is, why they differ from standard commercial insurance and why national regulators should take a different view when applying the new rules.

likewise, one would not really be able to argue that the EC got the point on why the business of large corporate insurance buying is different to private individuals buying motor and household cover.

But the work put in on the BEr and the agreement with BiPar on the Transparency Directive certainly gained some recognition of the difference.

TRI-LATERAL TALKSmost importantly, it also turned a two-way conversation between regulators and politicians towards the insurance industry lobby and a more rounded three-way chat that included the customers.

When Jorge luzzi took the reins of Ferma in 2011 the world was still struggling with the aftermath of the credit crisis and Europe really was in the doldrums.

at this point the prospects of real growth outside of Europe in places such as China, india, russia, Brazil and South africa were really becoming apparent.

The subject of conversations during Ferma’s meetings and our own roundtable discussions at national level suddenly turned

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NEWS6 Association News—Ferma Forum 2013

Julia Graham’s ascendance to power at Ferma should mark the beginning of a new educational era for Europe’s risk management community so long as she can grasp the nettle. CrE Editorial Director

AdriAn LAdbury reviews latest news on risk education from maastricht and beyond

From the crown to the toe

CONTINUED ON PAGE 8

Julia Graham

NEWS8 Association News—Ferma 2013

from broker commission and the impact of Solvency II on capacity levels and captives to how risk managers should cope with ever expanding horizons and the complications of global programmes.

This was quite a shift and suited Mr Luzzi down to the ground with his experience of working for an Italian company that has deep connections with Brazil and Argentina.

Interestingly the shift in the debate under Mr Luzzi’s tutelage also reflected a change in emphasis from insurance management to enterprise-wide risk management. This was arguably inevitable given the ever-rising significance of cross-border risk management and risk transfer.

It should come as no surprise therefore that, as Ms Graham takes the president’s chair, the subject of where the risk and insurance manager fits into all of this and how the profession can raise its profile and influence at corporate level tops the agenda.

The bottom line appears to be that while Mr Den Dekker was in the chair European companies were still reeling from the immediate effects of the crisis and in complete crisis mode.

It was survival of the fittest time and so the focus was totally on cost control and eking the most value out of every business relationship possible.

BALANCE ADJUSTMENTHence perhaps the focus during this period on the need to correct the balance between customer and provider of service—risk and insurance manager and insurer and broker—not least in the area of remuneration.

But when Mr Luzzi took over the immediate crisis was seemingly over for those that had survived, the global trend was set and strategy was clear: expand to new markets or shrivel up and die.

Over the last couple of years, therefore, the European risk management profession has been grappling with the rather more exciting but no less demanding task of working out how to manage these new international exposures, as was so blatantly exposed by the impact of the Thai floods in 2011.

It is interesting to note that Mr Den Dekker himself moved onto a new role at VimpelCom after his stint in charge at Ferma where he has spent most of his time building a new international insurance and risk management programme for a rapidly expanding group with interests in Europe, Africa, Asia and elsewhere.

Two years on it is possible to argue that Ms Graham takes the reins at a calmer and more reflective moment in the evolution of the risk and insurance management profession.

As illustrated so graphically in our last three Risk Frontiers surveys of Europe’s leading risk managers, risk management has flown up the corporate agenda.

It has been quite difficult to prize participants in the roundtables away from big macro political, economic and social risks to focus on the more

mundane asset risks that occupy the majority of national association members’ time.

This is because it is these macro risks that occupy the minds of risk managers’ bosses on the board, and for which they seek solutions.

Hence the explosion in demand for more innovative, brave and joined-up solutions from brokers and insurers to tricky challenges in areas likes cyber, supply chain and reputation.

And, not surprisingly, as risk and insurance managers increasingly find themselves being challenged to deal with truly enterprise-wide risks they are asking themselves whether they are qualified and, perhaps more importantly, seen to be adequately qualified, to come up with the answers.

Not quite an identity crisis but not far from it.

Hence the rise of the debate over education and accreditation that is likely to dominate Ms Graham’s agenda.

The corporate risk and insurance manager helped their company through the crisis by delivering insurance and risk management solutions that worked, while at the same time managing to cut costs.

They then came up with some interesting new ideas and solutions to help solve wider corporate risk challenges.

Now they are being asked to prove their ability to take on the bigger challenges and need to be equipped

with the tools and credentials to rise to that role.

It is time for the community to grow up and act more like a profession.

To do that it needs some more formal and internationally recognised and transportable qualifications or accreditation.

Working out exactly how to do that is Ms Graham’s biggest personal challenge.

The effort got underway positively in Maastricht.

During the forum it was announced that Ferma’s member associations have given the federation approval to move ahead with its plans to certify European risk managers, having been assured that they will play a major role in the process.

The project was announced at the start of Mr Luzzi’s reign and Ms Graham has helped lead the effort. It has not been an easy task as opinions on the topic are as diverse as the job functions of the individual risk and insurance managers that Ferma represents.

But progress was reported at the Forum. Michel Dennery, Deputy Chief Risk Officer, GDF Suez and Vice President of Ferma told journalists: “The reality is that we are working from scratch. There have been different points of view but we have now moved on—we are decided—and now it’s time to get on with it.”

Mr Dennery, who is leading Ferma’s working group on certification, gave details on how the scheme is likely to shape up.

He explained that Ferma has no plans to provide qualifications or certify risk managers itself.

Instead, national associations will work with national professional bodies, educational organisations and universities to provide the qualifications, ongoing professional training and ultimately certification.

Ferma will fit into this structure by developing the minimum standards of qualifications and core competencies required for certification. These standards will then be used by the national associations and other bodies. (See front page story for more details of

Ferma’s certification plans).Meanwhile Ifrima, the International

Federation of Risk and Insurance Management Associations, plans to develop a global risk management certification scheme.

CRE’s recently completed Global Risk Frontiers survey of close to 100 risk managers at corporations based in Europe, North and South America, Africa, Asia, the Middle East and Australasia proved that this will be no easy task.

We asked risk managers across the globe whether it would be a good idea to try and create such a globally transportable scheme.

Europe’s risk managers tended to say yes, go for it, South Africa’s and Australasian risk managers asked what was the point as they already had such schemes in place, and North American risk managers said it was a great idea and everyone should adopt RIMS standards.

Carl Leeman, Chief Risk Officer, Katoen Natie and President of Ifrima, conceded it would not be an easy task and that it would take time.

ALL ABOARD“Certification and education—globally or in Europe—will not be done by just one body,” said Mr Leeman. There are potentially financial benefits to be had from providing education and certification and interested parties ‘don’t want to miss the train’, said Mr Leeman in his typically forthright manner.

Like Ferma, Ifrima is not ‘looking to reinvent’ the wheel when developing a global certification for risk managers and will ‘go to the people that already have the knowledge’, said Mr Leeman.

One European association that has not been slow to promote itself as the go-to body for education is AMRAE in France.

Its support for Ferma’s certification project suggests it therefore may have legs.

AMRAE’s Bénédicte Huot de Luze told CRE that the association firmly supports the pan-European certification idea and pointed out that it has already taken steps to help the project move forward.

In early October it unveiled a framework for risk management that it believes could serve as a reference for the profession across Europe and form the basis of Ferma’s planned certification scheme. This seems an eminently sensible idea.

It would be nice of course if the Ferma certification scheme came about as a result of a truly pan-European collaborative effort that takes the opinions and ideas of all nations big and small.

But Ferma does not have a bottomless pit of cash to invest in such initiatives so achieving that may not be easy.

However, once the certification in Europe has been agreed upon Ms Graham, alongside Mr Leeman, and starting with RIMS, can take the project onto the international stage and convince everyone else to follow suit. It is time grasp that nettle—over to you Ferma.

CONTINUED FROM PAGE 6

Jorge Luzzi

Michel Dennery

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10 FERMA FORUM 2013News Extra


[maastricht]—Risk manageRs must embrace tools and techniques that translate exposures and risks into clear financial terms in order to gain support for their activities and grab crucial spend, experts said at this year’s Ferma Forum.

in a session entitled Risk management influencing The Balance sheet, Tjerk van Dijk, Director insurance, stork and Fokker, said that over the years risk managers have struggled to translate company exposures and explain their own work to financial leaders.

straiGht taLKspeaking to Commercial Risk Europe, mr Van Dijk, who hosted the session, said: “Your CFO only understands numbers. They do not understand a heat map or the like. so we must explain to them what we do. By using a comprehensive tool to translate the activities of a risk manager into practical numbers you get much more attention and you can explain your added value.”

in order to achieve this, risk managers must carry out a likelihood and financial impact analysis for different scenarios across the full range of risks. “We now call this stress testing the balance sheet,” said mr Van Dijk, who is also a board member of narim, the Dutch association for risk and insurance managers.

During the session alex van den Doel, managing Director aon global Risk Consulting (agRC), gave real life examples and discussed the different tools available to translate insurances and risk mitigation into balance sheet numbers.

“in the end you basically calculate your company’s risk bearing capacity,” said mr Van Dijk. “You determine how much of your balance sheet is protected by insurance and risk management and show the CFO this is our risk bearing capacity, this is covered by insurance, this is our open exposure and then decide how to deal with that excess.”

thE BOttOm LiNE“it is a way to get budget, grab the CFO’s attention and explain that what you are doing is good for the company and needs investment.

By stress testing you can also show the CFO what would be the consequence if they do not invest in insurance and risk management.”

mr Van Dijk believes such analysis is increasingly carried out by risk management departments and is important in the fight for risk management spend.

“all companies are under pressure to cut costs and departments are fighting for budget. if you cannot justify your risk management costs

and why you insure risk then you lose ground. in the end your CFO is taking decisions to give resources or close or cut back departments within companies. especially for companies with a very good loss ratio track record it is very difficult to convince that insurance is really necessary when things go wrong,” he said.

stress testing the balance sheet also enables risk managers and insurance buyers to clearly explain to financial managers that insurance is not a panacea against all risk.

it helps make clear to CFOs that risk transfer is just a financial instrument that often provides only partial assurance when things go wrong, explained mr Van Dijk.

given the fact all risk managers know they cannot insure 100% of the balance sheet and that certain exposures are a fact of life, the session also touched on alternative risk mitigation options.

experts explained that insurance is just one solution. after all, they added, obtaining cover for all cyber risk exposures and fully protecting reputation is not possible.

“even if you can get insurance you are not always going to cover all the threats to your balance sheet. so you need to look at whether you can mitigate through legal or physical loss prevention. There are no definite answers here but there are a lot of questions for risk and insurance managers to think about,” said mr Van Dijk.

aNOthEr LEVELOnce risk and insurance managers have established a base level of balance sheet exposure they can continue to report on the management of those threats. This produces several benefits for the department.

“You can change, tinker and adapt your risk management strategy as you go along and step-by-step bring it to the next level. Because you have a base exposure level you can then recalculate exposures after risk management activity, go back to your CFO and say, look how i have better covered your balance sheet. From there it becomes a lot easier to ask for more resources to do more on other risks and areas of the business,” said mr Van Dijk.

Risk managers urged to showinfluence on firms’ profitability

Tjerk van Dijk

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11IN PERSON Jo Willaert, Agfa Gevaert & Ferma VP

O n 29 September the Federation of european risk management Associations (Ferma) elected Jo Willaert

of the belgian risk management association belrim as its new vice president.

“It was a nice surprise and an honour,” said mr Willaert. “It is always good to be recognised for your work and it is something I am very proud of.”

In his day job mr Willaert is corporate risk manager at belgium-based multinational Agfa Gevaert. here he is in charge of the group’s global risk and insurance programmes.

“One aspect of the job is setting the risk methodology for the group, then the other more day-to-day and operational aspect is monitoring all aspects of our global insurance programmes. We operate in more than 40 countries and I have to make sure that all

of our procedures are within the rules of the game,” he said.

It is a role that blends daily operational risk management tasks with senior management liaison to achieve the same objective—management of the risks, both

Best footforward...Nicholas Pratt speaks to newly-elected Ferma vice president Jo Willaert about his risk management philosophy and objectives for the federation as he beds into his new post

insurable and non-insurable, which could bring the business to a standstill. mr Willaert believes there are two key skills needed in his role: communication and problem solving.

“As a risk manager you can have an economic, legal or engineering background, but the first major skill is to be a problem solver. It is important to be seen as someone that adds value in the company and is not there to block. Ultimately our job is to support the growth of the business. that means you have to be flexible and inventive in finding solutions because things are never black and white in risk management,” he said.

risk managers must have the ability to talk to the risk takers on the shop floor and also those in senior management. “that means knowing when to talk and when not to talk because you also have to be a good listener. It is about common sense,” said mr Willaert.

When it comes to the big risks that keep him awake at night, mr Willaert identifies economic and political stability as well as environmental exposures. Volatility in cost of materials is one of his biggest concerns, alongside the rapidly changing technology market and increasing complexity of the supply chain.

however, if the gods of risk management were to bestow a risk management-specific superpower upon mr Willaert it would be one that granted him a role in deciding the global strategy of the company. “I am very lucky that in my company I am close to the board, they listen to me and risk is taken seriously in all fields, but it would be great to be part of the decision-making. risk taking is, after all, part of entrepreneurship,” he said.

Of his new Ferma role, mr Willaert said: “At my age, I think I can bring a lot of experience and some wisdom to the role. In my time as an insurance broker I have some experience of the international market, especially in the US. And in my current location in Antwerp, I have close proximity to eU officials in brussels.”

Forging a closer link between Ferma and the european Commission is one of three targets that mr Willaert has set for his role at Ferma. “I think it is important that we have a good day-to-day working relationship with the european Commission. I have an academic background as a lawyer and an interest in european affairs. I know that this is also an area of interest to the Ferma president (newly elected Julia Graham) so I would just be happy to help in any way I can,” he explained.

mr Willaert will also be heavily involved in the 2014 Ferma seminar in brussels. “It is natural that in my location I am more involved than any other board members in helping to make sure next year’s event is a success. It is still too early in the preparations though to say exactly what will be involved.”

he also hopes to help promote Ferma’s european certification project, something that mr Willaert sees as vital to raise the professional profile of the risk management discipline. “the certification will help individuals in their own career development, but having more and more members fully certified will also help to bring the profession a more recognised status,” he said.

It will also help give risk management a clear definition in the minds of colleagues and senior managers, he continued. “Within the insurance industry it is an easy role to define but it is much harder to describe in a wider business context. If you were to ask a number of senior executives to give their definition of the risk management role you would get 100 different answers.”

but it is also important to acknowledge the diversity within risk management, said mr Willaert.

“It is important there is no conflict between risk managers and other managers who are also part of the risk management process—the hr managers or quality managers. but I think there is a lot of value in having a dedicated risk manager that has more than a purely operational role and is close to the company’s decision-making. Successful business is all about taking risks so the role of the risk manager is crucial in ensuring that the entrepreneurship is controlled and that the company only takes risks it can afford.”

Jo Willaert

12 HOT SEATAxel Theis, AGCS

For the first half of this year aGCs reported gross written premiums down compared with the same period in 2012 by just over €300m from €3.1bn to

€2.8bn. the combined ratio was flat at 98%. operating profit unfortunately headed in the same direction as premium volume. it slid to €178m from €192m during the same period last year.

this compared with allianz Group that reported total revenues up by 6.5% to €58.8bn from €55.2bn. at group level the operating profit was up by 12.7% to €5.2bn and net income rose to €3.5bn, up 24.6% on the previous half year total of €2.8bn.

the premium reversal at aGCs marked the end of a steady and impressive upward trend since the German group formed its large corporate operation in 2006.

the full year figure in 2012 was €5.3bn. this followed €4.8bn in 2011, €4.5bn in 2010 and €4.3bn in 2011.

When aGCs was formed in 2006 it reported first year gross premiums of €2.8bn.

the numbers for the large corporate business are boosted by premiums from the Zurich-based alternative risk transfer business allianz risk transfer aG (art).

LOCAL KNOWLEDGEthe premium figures since 2006 have also been buoyed by the amalgamation of premiums from local allianz Group businesses as aGCs has set up a series of dedicated local branches around the world.

the company now has some 3,500 staff in 28 countries worldwide, including in sweden where its latest branch was opened in october.

the aGCs asset base (by market value) reduced by 5% from €11.5bn to €10.9bn for the first six months of this year compared to last.

this was because of a transfer of dividend payments to the parent group shareholder and adjustments caused by foreign exchange.

the company pointed out that its exposure to european peripherals remains very limited. the only peripheral sovereign exposure is to italy, which accounts for 0.8% of its fixed income portfolio.

aGCs is comprised of four listed operating companies and it reported that each has

‘substantial’ excess capital. the preliminary solvency ratios, which are calculated at year end (31 Dec), were 293% for aGCs aG, a whopping 822% for aGCs france, 468% for aGCs Na and 497% for art in Zurich.

aGCs received an outlook upgrade to ‘stable’ from ‘negative’ on its standard & Poor’s aa rating in March of this year, followed in July by credit rating agency aM Best confirming the a+ (superior) financial strength ratings of allianz se and various subsidiaries including aGCs aG, aGCs france, and aGCs North america. aM Best also confirmed allianz risk transfer aG’s rating of a (excellent).

so what was the explanation for these results and what implications do they have for future strategy?

When the results were announced aGCs attributed the decrease in premiums to ‘market conditions’, foreign exchange movements and ‘focused underwriting’ across all lines of business. it added that the reduction was ‘counterbalanced’ by over €400m of new business that it won during the first six months of the year.

from a profit perspective the numbers were hit by hurricane sandy at the end of last year.

allianz took a significant slug of the losses related to this event ($590m at last count of which aGCs took around $113m net). the claims hit the first quarter and were still working their way through the system at half-year stage.

overall, Dr theis told Commercial Risk Europe that 2012 was an ‘easier’ year than 2013 to date.

as noted above, the group exceeded the €5bn mark in gross premiums for the first time in 2012.

this, Dr theis said, was a ‘very positive message’ and growth in regions such as asia, africa, latin america and central and eastern europe (Cee) provides positive expectations for ‘years to come’.

aGCs is pursuing these growth opportunities with real investment. it has a strong focus on africa for example, where Delphine Maidou was recently transferred to lead exciting growth potential in the fast-developing sub saharan region from aGCs’ south african base.

But the strategy does not exclude markets closer to home such as the Nordic region and russia. “it is all going really well,” said Dr theis.

But, along with its rivals, aGCs still derives a large proportion of its premiums from the more mature and highly competitive markets of europe and the Us, hence the downturn in volume.

these markets remain highly competitive in still very tough operating conditions. so the underlying premium base is not growing much and rates are not rising in most lines.

should the group rely on the market to harden in order to arrest this decline? Definitely not, Dr theis told Cre.

END OF HISTORY“i think i am less worried about market developments because you cannot base a business model believing in cycles. You don’t really know when a market will change or if it will ever as it did in the past. the old seven year cycle may be over,” he said.

there has been much talk in recent times about the rise in the use of more sophisticated pricing and catastrophe models that has made pricing more transparent and risk-based, thus leading to more accurate and less volatile pricing.

But there can be little doubt that high capacity is a huge factor in the current market.

“Money is so cheap and there is so much capacity around. People are looking for investment opportunities and i don’t think we will see market changes like we did after the World trade Centre attacks. interest rates are so low, cheap money is coming into the market and sandy really had little or no impact on prices in the primary market and even less so in the reinsurance market. Berkshire hathaway has entered the primary market in the Us and lloyd’s through the aon sidecar,” he explained.

if this is to be a longer-term trend and combines with more accurate modelling, more sophisticated risk-based regulation and the like, the cycle will presumably be flattened for good.

as a result the model has to be adjusted to fit the new market dynamics. the question is how. as explained below, for Dr theis, and it seems aGCs’ leading competitors, the answer lies largely in the field of global programmes.

AGCS recently reported premiums and profits down at half-year stage. But Dr Axel Theis, CEO of the German-based insurer, told CRE Editorial Director AdriAn LAdbury that this is no disaster and merely underlines the need for the group to continue its long-term plan of investment in global programme capabilities and its focus on delivering high service standards and innovation for an increasingly demanding customer base

Premiums and Profits were down for aGCs at half-year staGe in a Perennially ComPetitive market. But, aCCordinG to Ceo dr axel theis, this does not mean the ComPany will Cease investment in its lonG-term Plan

Growth halts at AGCS but no need to panic—business as usual: Theis

Axel Theis, AGCSHOT SEAT 13

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future Growth lies in international CoveraGeGlobal programmes are becoming an intense battlefield for international supremacy among the leading insurers. AdriAn LAdbury asked Axel Theis of AGCS where this critical areas fits into his strategy and found it to be central

the focus for insurers in the international large corporate sector such as aGCs has to be the provision of international coverages that are properly serviced and supported on the ground wherever needed.

this is consistently what risk and insurance managers in europe and worldwide tell Commercial Risk Europe each time we carry out a survey, or discuss the topic during one of our events.

this will come as no surprise to axel theis, Ceo of aGCs. he and his team are on the case.

he is just as aware as the Ceos at his

rivals that if this mix of quality and diverse services can be delivered in a cost-effective manner the sky is the limit.

the premium base for this business is massive and growing fast as companies of all sizes seek growth opportunities in so-called emerging markets.

it is certainly useful to have a dedicated aGCs team in 28 countries around the globe and the support of allianz group offices in many more territories. But the bottom line is that this business does not actually need to be supported by a massive cost base.

the global programme market is all about quality not quantity. it is about knowledge, speed of reaction and delivery of innovative and fluid solutions, not bums on seats and policy volumes.

aGCs and its rivals do not necessarily have to invest mountains of cash to plant flags in every territory of the world.

But they still need to invest in the scarce and valuable resources that are needed to deliver the goods for risk managers with international exposures, not least skilled, experienced and knowledgeable people.

Dr theis is fully aware of this challenge at a time of falling premium volumes in historically core markets. the knee-jerk reaction would typically be to cease investment in new initiatives, cut costs and wait for a market turn.

But Dr theis remains convinced that continued investment in the network to win that high value international business is critical and worth the punt, despite the currently tough market conditions in core markets.

“We need to continue to invest in quality expertise, services and products and we are further investing in the network as proven by the new office in sweden,” he said.

the problem of course is that aGCs is certainly not alone in spotting this sweet spot and competitors are on the march.

so what does aGCs have to offer above and beyond its network, quality people, services and products, all of which its competitors are also striving to deliver in this

fiercely competitive market?for one, aGCs is able to draw upon

the specialist services of allianz risk transfer Group (art), the alternative risk transfer business based in Zurich.

“art provides interesting captive solutions and for large projects we can build a portfolio approach and manage the risks over years. We are having many interesting conversations with lots of the fortune 500 companies,” said Dr theis.

another edge that aGCs can offer on top of the normal service offered by many insurers in this market is the wider package under the ‘one allianz’ brand that includes personal lines, asset management, global assistance services and, of course, employee benefits.

the latter is becoming increasingly popular for risk managers with global programmes.

Dr theis said that aGCs is currently really pushing the ‘one allianz’ capabilities to brokers and getting a positive response.

“in many cases the brokers are actually surprised to learn the extent of what we offer on a worldwide basis. all Net is similar to what we offer risk managers for global programmes and we are currently setting up improved information and communication systems within the group to help facilitate this more effectively,” he explained.

a third differentiator enjoyed by aGCs is the existence of euler hermes, the international credit insurance company, within the allianz group.

for multinational customers euler hermes has created eh World agency that again mirrors the structure of aGCs global programmes systems and all Net.

Being able to offer such a wide range of services to the modern day risk manager at a multinational corporation has obvious appeal and benefit for both customer and insurer.

But, as the big brokers found to their cost following the frenetic round of mergers that created today’s global broking giants, it is not necessarily that easy to get these previously disparate and potentially competitive elements to work together for customer benefit.

Many risk managers will attest that this very much remains a work in progress among the brokers, despite years of investment and effort from top management.

Dr theis is keenly aware of the need to deliver this potential package to customers in the easiest and most cost-effective fashion.

hence aGCs’ decision to adopt a new management structure effective as of 1 January, 2014. the group said it will ‘increase its focus on the delivery of client and broker services through its international office network’.

Under the new structure, global responsibility for these activities will now be shared between two Chief regions & Markets officers (CrMos).

Munich-based andreas Berger will take responsibility for continental europe, africa and asia, while New York-based art Moossmann will take responsibility for North and south america, the UK and ireland, the Middle east, the Nordic region, russia and the Pacific region.

aGCs Board Member Bill scaldaferri also will expand his role to become Chief Underwriting officer (CUo) for Global specialty lines, in addition to his existing role as Ceo of art. he takes charge of this business, which accounted for roughly half of aGCs premium in 2012 when combined with art revenue, from Mr Moossmann.

the two CrMos will work together to lead aGCs’ regional strategy, with a specific focus on the delivery of services for clients and brokers, notably insurance programmes.

Mr Berger also takes on a wider group role with a particular focus on strengthening broker management, which is one of the fastest growing distribution channels for allianz.

Dr theis explained: “this is the right move at the right time to drive the next phase of aGCs’ strategy. By having two highly experienced CrMos working in partnership, the important and fast-increasing responsibility for our regional strategy and market-facing activities will be shared between andreas Berger and art Moossmann at board level.”

thus it seems that Dr theis’ grand plan to place aGCs firmly in the leading pack of multinational insurers may be coming together nicely.

14 HOT SEATAxel Theis, AGCS

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Expertise and collaboration key to innovation in marketInnOvATIOn hAS BEEn A hOT wORD in the European and international risk management community over the past few years as risk and insurance managers struggle to find the deep and wide solutions to complex emerging problems in areas such as cyber, supply chain and reputational risk.

Insurers, and to a lesser extent brokers, have been criticised for being too slow to react to changing demand, too backward looking, too conservative and too focused on pushing products rather than designing bespoke solutions.

The insurers and reinsurers have understandably reacted by pointing out that they have a duty to stakeholders and customers, as well as investors and regulators, to protect their balance sheets and ensure they only take on risks that they truly understand for a reasonable price.

This has therefore led to demands for new information from customers to help insurers understand and analyse complex risks.

In the case of international supply chain exposures, in particular, this has led to something of a clash.

The risk managers complain that insurers’ information requests are onerous, difficult to provide for competitive reasons and that risk transfer partners really do not know what to do with the data anyway.

In response, the insurers claim that customers often do not really hold that data themselves, that they are basically ignorant of the exposures they demand cover for and are unwilling or unable to enter into the kind of true partnership needed to come up with the risk transfer answers.

This debate was particularly lively in Germany over the last couple of years as leading members of the German risk and insurance management association, the DvS, used its annual event and others to bang the drum.

when asked whether the complaints were reasonable, AGCS CEO Axel Theis said that in his view the debate was a ‘bit exaggerated’ and that the key was trust and true collaboration between the three parties: risk manager, broker and insurer.

“You can’t handle a significant liability claim in the pharmaceutical industry for example without access to information. we understand that the information provided in such markets is confidential. Equally the information we give as an insurance company is privileged. There has to be a collaborative aspect,” he said.

DRIVING FORCESMore generally, Dr Theis agrees with many risk managers that CRE has interviews in recent times on the topic of innovation—that expertise is the key to moving forward.

The pharma market is a good example of this, he said. AGCS is one of the few players that offers significant primary capacity in this complex and challenging market. To do this it has created a specialist entity and products.

This market needs such an approach because it is not just about established product lines.

Supply chain, for example, has become an important risk for this sector. “Supply chain is an important exposure in this area, it is not just about legal risk and insurance. You have to design special coverage and manage the potential exposures of supply chains, which can lead to systemic issues and lead to significant losses. You need a real team of experts doing nothing but this and this is what we have created,” explained Dr Theis.

One serious challenge for an insurer like AGCS is, however, to strike a balance between the niches such as pharma and more standard lines.

The rise of risk-based capital management and regulation means that insurance portfolios built upon single or small clusters of high risk business is no longer economic, not that it really made

much sense in the past anyway.“You have to find the right balance.

Yes, serve a niche, but you also have to do the mainstream because you can’t only do niches. It does not make economic sense,” said Dr Theis.

The insurer also pointed out that while it may be easy to bash insurers for not responding to new exposures the market is not devoid of achievement.

“You have the challenge from risk managers that insurance is not innovative enough, which is true to an extent. But do remember the advances made recently on the environmental liability side, how far the market has developed product liability and

recall markets, which is close to pure loss of profits really,” continued Dr Theis.

Cyber is another area that has generated a lot of debate and demands for new solutions from risk managers. Again Dr Theis said that the insurance sector has not done badly.

MARKET CHALLENGES“In cyber I believe we will see more capacity and products as the market is becoming more challenged. Data is being stored in the cloud and so there is a danger that some of the control of the risk is lost. we are bringing new products to the market and particularly on the

telecommunications side and this will be a combined product that includes credit fraud and engineering,” said Dr Theis.

And, hey presto, shortly after our interview with Dr Theis AGCS announced the launch of Allianz Cyber Protect designed to protect against cyber criminals, data loss and other potential ramifications.

This product offers a suite of three insurance products to address various first and third party liability problems that can arise from a serious cyber attack or data breach.

The product includes cover up to a limit of €50m for a broad range of cyber exposures. Three levels of business

interruption cover can be tailored and it offers immediate access to a crisis response team, in partnership with global consultants KMPG Forensic, Dell Secureworks, Incoming Thought Ltd and E-merging Technologies Group Inc.

This product and similar offerings made by rivals may not be quite the all-encompassing solution to cyber risk demanded by the CEO who has just read the latest related horror story in the newspaper.

But it does seem like AGCS and its major rivals are listening to client needs and coming up with solutions faster than they did in the past.

15E-NEWSLETTER

» Aon shAkes up business with key chAnges At the top

Aon hAs Appointed Mike o’Conner as Ceo of Aon risk solutions (Ars), the firm’s risk management business, and taken additional steps to strengthen its global headquarters and operations in the eMeA region. the broker has also appointed eric Andersen as Ceo of Aon Benfield, the firms’ reinsurance arm, and announced that Bryon ehrhart, formerly Chairman of analytics and investment banking for Aon Benfield, will become Ceo of Aon Benfield Americas.

Mr o’Conner joined Aon in 2008 and previously held the role of chief operating officer for Aon’s risk business, which comprises both Aon Benfield and Aon risk solutions. he will report to steve McGill, Group president of Aon plc and Chairman and Ceo of risk solutions.

dominic Christian has been promoted to executive Chairman of Aon Benfield international and will become Ceo of Aon Uk Ltd.

rob Brown, Ceo of Ars eMeA, will be asked to join Aon’s executive Committee, pending Uk board approval.

Mr Christian will focus on Aon’s presence in the Uk leading efforts with clients, colleagues and public stakeholders, including regulators, government officials and the Lloyd’s marketplace, said Aon.

Mr Brown will broaden his efforts by joining Aon’s executive Committee while continuing to lead Aon’s brokerage operations throughout MenA, it added.

Mr Andersen, the new Ceo of Aon Benfield, will also report to Mr McGill.

Mr ehrhart, now Ceo of Aon Benfield Americas, has spent nearly two decades at Aon. since joining the firm in 1994 he has led the development of the analytics and technical services division of Aon re Global.

“these leadership changes represent a natural evolution as well as our understanding that we must continue to stay ahead of the curve for our clients,” said McGill.

—Ben Norris

» insurers urged to end muddle over environmentAl cover

[maastricht]—A LeAdinG Broker hAs urged insurers to stop ‘blurring the lines’ on environmental cover because it is causing confusion among risk managers over the type of insurance needed to fully transfer environmental risks.

speaking to Cre at the 2013 Ferma Forum, Julien Combeau, executive director of Willis’ environmental practice, said this is particularly prescient because some european countries, most notably France, are looking to introduce ecological damage into civil codes that would muddy the waters still further.

the environmental Liability directive (eLd) is the big pan-european ‘polluter pays’ legislation governing environmental damage.

there is broad agreement that general and public liability policies do not fully respond to eLd risks. Any liability incurred as a result of eLd risks such as gradual pollution, own site remediation or first party liability, statutory liability for biodiversity damage and statutory liability for dealing with imminent threats of environmental harm are unlikely to be covered under general liability policies, experts say.

Many therefore advise firms to purchase specific environmental impairment Liability (eiL) cover to better transfer their exposures under the eLd and other environmental regulations and legislation.

But Mr Combeau believes insurers are not making the distinction between what is and what is not covered under general liability policies clear.

“some markets with bespoke lines of environmental business are clearly drawing the line. But some others that may not have an environmental practice still suggest they cover something that in reality maybe they are not. in terms of casualty policies and specialist eiL policies we are talking about a blurring of lines over what will be covered. this makes it hard for risk managers to know what cover to take out and who to trust…i think that the interaction between eiL products and casualty products should be addressed by underwriters sooner rather than later,” he said.

“We know for sure that the affirmative cover provided by eiL bespoke products is a proactive wording. it is understandable, we know where the underwriters are coming from and there is a clear statement. it is easy for us to explain that to the client. But clients still see some level of pollution coverage in general casualty products and are asking a lot of questions about what is covered in terms of third party liability and statutory damage,” he continued.

Confusion over environmental cover could be about to get worse, suggested

Mr Combeau, with France considering the introduction of environmental damage into its civil code of law.

the French Ministry of Justice has recently received a report on this possible development following concerns from environmental groups and authorities that the eLd is not protecting and remediating environmental damage as was hoped.

it includes proposals for the introduction of punitive damages, class actions for environmental pollution and the creation of an overarching environmental management authority, such as the environmental protection Agency in the Us.

Mr Combeau pointed out that not all of these measures are likely to be introduced and that it is still not even clear if the French authorities will adopt ecological damage into its civil code of law. however, he said that powerful lobbyists are pushing for such moves.

if the French authorities do go down the civil code route the environmental liability picture will become even more murky for French companies and risk managers, suggested the broker.

Companies could then be held liable twice for the same environmental damage and insurers would need to be even clearer about which products would cover the new exposures, he said. “if the civil code is introduced companies could suffer a double hit. one action through the statutory chain of liabilities (eLd) and another through judges and civil litigation in order to indemnify the victim or the environment,” warned Mr Combeau.

“in terms of insurance it means that you really want to ensure that your progamme responds to both cases, which makes it even more pressing for insurers to be clear about what is, and is not, covered under casualty programmes,” concluded Mr Combeau.

—Ben Norris

» Aig lAunches risk mAnAgement AcAdemy

AiG hAs LAUnChed its AiG risk Management Academy (ArMA) to boost the talent pool of risk managers and help satisfy the increasing demand for risk professionals. the academy of course focuses on risk transfer strategies but also aims to extol the virtues of wider risk management.

through the sharing of knowledge and experience with a network of industry peers the academy is designed to enable attendees to broaden their global outlook and boost performance.

its programme will cover a range of topics including how to better understand the unique issues and risks facing multinational companies when expanding into new territories and structuring effective and compliant multinational programmes to meet an organisation’s specific needs.

it also gives participants the ‘inside track’ on how to extract more value from their relationship with insurers and identify how insurance can best be used as a strategic source of contingent capital, said AiG

philippe Gouraud, head of the eMeA Client Management Group at AiG, explained: “this programme underpins AiG’s vision to support our partners to fully capitalise on our expertise and deliver beyond insurance, providing not only financial capital but also the intellectual capital to help their companies

sharpen their ability to compete on the global stage.”

ArMA is a three-module programme run at locations around europe. it comprises sessions with AiG experts and senior management, as well as highly qualified external contributors from business and academia.

—Ben Norris

» French construction compAnies At risk As bitumen And AsphAlt declAred threAt to heAlth

[paris]—ConstrUCtion CoMpAnies in France could face increased workers’ liability risk after a government agency report acknowledged that the handling of bitumen, which is mainly used in asphalt for road building, could be a cause of several diseases, including cancer.

Lawyers and families of employees that sued companies for alleged contamination leading to death have celebrated the report by Anses, a health and food agency linked to the French health Ministry.

having launched an investigation at the request of a union, Anses concluded that there is indeed a risk to workers’ health linked to their exposure to asphalt and the gases it emits when still hot.

the report embraced the conclusions of previous work by the international Agency for research on Cancer (iArC) that, in 2011, said exposure to oxidised bitumen during roofing was a probable cause of cancer.

the iArC also concluded that exposure to hard bitumens and their emissions during mastic asphalt work probably causes the disease.

the same classification was applied to exposure to straight-run bitumens and their emissions during road paving.

But in its report, Anses also said that bitumen and its emissions can cause respiratory conditions like asthma and chronic bronchitis. it acknowledged suspicions that the substance could be behind the occurrence of cardiovascular diseases and dysfunctions to the immunologic system.

the agency says therefore that the exposure of workers to bitumen and its emissions must be reduced.

in a statement released after the study was made public, UsirF, the French association of road building companies, argued that the sector already implements the recommendations made by Anses.

But a lawyer who has won a high profile case for bitumen contamination celebrated the report, saying that the document ‘reduces to naught’ the ‘scandalous denial’ of road construction companies about the risks of handling bitumen.

Lyon-based barrister Jean-Jacques rynck said the report strengthens the argument that companies have kept exposing workers to bitumen and its emissions without appropriate protection, even though they were aware of the risks involved.

As such he claims French companies, rather than the country’s social security system, should be made to pay for the financial consequences of the resulting diseases.

—Rodrigo Amaral

» the best oF the web

Commercial Risk Europe reports the leading news stories of relevance to Europe’s risk and insurance managers every week in its electronic newsletter. Below is a round-up of the most popular articles published last month. To sign up for the free CRE weekly newsletter please go to: http://www.commercialriskeurope.com/ more-information/newsletter/sign-up-here

NEWS Continued from Page One 16

in supporting the scheme whereby Axco will provide a version of their global programme compliance information system to Airmic members.

It will build upon Axco’s current offering and provide answers to a set of key policyholder questions on compliance supplied by Airmic. It will be freely available to the association’s members online.

NO EXTRA COST“We expect to be able to deliver the product to our members in mid-2014 and it will be at no cost to members of Airmic,” said Mr Hurrell.

A joint working party, including

two broker representatives and three of Airmic’s leading lights led by deputy chair Helen Hayden, is overseeing progress of this solution. Axco is assisting with the development work.

The database’s main aim is to provide global guidance on admitted and non-admitted insurers by jurisdiction.

This varies not only between countries, but also within some territories such as the US. It can also depend on the class of business being written.

Failure to comply can result in fines, cancellation of cover, reputational damage and, in exceptional cases, imprisonment.

“The database idea has gained support from all corners of the

market, and we are delighted to have Lockton, JLT and AJ Gallagher on board. We can now see a way towards meeting our objectives, and I am confident we will have something of real value to our members ready during 2014,” said Airmic’s Technical Director Paul Hopkin.

MARKET-WIDE HOPEMeanwhile Airmic has not given up hope of delivering a market-wide global programme compliance database that it originally saw as the ideal solution for members grappling with global programme compliance issues.

“We have been exploring with the insurance market whether it makes sense for insurers to

cooperate with each other on the expensive and time-consuming task of data collection around the world, recognising that this is all information which is in the public domain and not competitively sensitive in any way,” Mr Hurrell told CRE.

This solution was first proposed by Zurich, but a number of multinational insurers have held back from joining the initiative, seeking to protect what they see as a key part of their value proposition.

Speaking to CRE in the summer, Mr Hurrell moved to allay fears that such a database would impinge upon insurers’ much guarded interpretation of compliance rules, stating that it would instead simply focus on providing up-to-date

factual information on laws and regulations.

Airmic is therefore keen for insurers to come on board to deliver the information.

INITIATIVE“Airmic is happy to support this initiative if it goes ahead, but the objective of trying to get member-focused international data available to members online will be achieved through the Axco project,” said Mr Hurrell.

Ferma and RIMS are keen on delivering global programme compliance solutions to their members and are being kept updated on developments in both the Axco-led initiative and the market-wide scheme.

Continued from Page one

GLOBAL: Compliance tool will be free for risk managers

was discovered in 2010, commercial firms have realised they too could be deliberately targeted or caught up in a wider attack.

However, some property insurers, especially in the energy sector, exclude physical damage triggered by cyber threats, while standalone cyber policies do not cover physical property damage.

But Laila Khudairi, a cyber underwriter from Lloyd’s insurer Kiln said: “We are providing tailored solutions and offering cover that plugs this gap.”

In addition to bespoke solutions, such as the one offered by Kiln, business interruption cover is also being promoted via a growing number of cyber insurance products aimed at European companies.

Cyber insurance currently falls into two main areas of risk—the costs and liabilities associated with a data breach involving personal information and the property damage and BI consequences of a security breach or network outage.

To date, insurers have mostly targeted the burgeoning market for data breach insurance, which primarily provides insurance against the costs and liabilities associated with the loss of sensitive information, either accidental or through hacking. The risk is relatively attractive to insurers because notification costs are easy to quantify and there is ready demand, especially in the US where data protection laws require companies to notify customers of a breach.

Some 90% of cyber insurance is sold in the US to cover data breaches at companies based in the country, according to Graeme Newman of CFC Underwriting, a Lloyd’s managing general agency.

Over the past year some of the most successful cyber insurers in the US—Beasley and AIG—have begun to offer standalone cyber insurance in Europe. In the past three months Zurich, AXA, Allianz and Chubb have all launched cyber insurance products targeting non-US companies. However, these offerings are largely based on those already sold by these companies in the US.

“Privacy is a relatively easy sell

in the US, but this approach is misguided in Europe,” said Mr Newman. “In Europe it is more about cyber first party business interruption and property first party damage. All businesses need technology to operate and if there is system interruption they will suffer a loss,” he said.

The leading cyber insurers are being attracted to Europe in the belief that European data protection laws will soon toughen, helping to boost demand in what has been an underdeveloped market for cyber insurance.

STRENGTH & HARMONYProposals to strengthen and harmonise European data protection legislation should stimulate and accelerate demand because any requirement to notify in a breach situation is expensive, believes Paul Bantick, Head of TMB in the UK at Beazley.

Beazley’s flagship policy, Beazley Breach Response, is the number one product in the US and is now being rolled out in Europe.

As yet the cyber insurance market in Europe has not taken off because few buyers feel the costs associated with a data breach warrant purchasing cover, explained Ben Beeson of insurance broker Lockton in London.

However, despite the proposed European Data Protection Directive there is no guarantee that the cyber market will evolve in Europe in the same way as in the US. Even if the costs of dealing with a breach end up comparable to those in the US,

the region is less litigious, noted Mr Beeson.

In the next few years there will be an increase in demand, but to sell cyber insurance successfully in Europe insurers will have to be more intelligent, such as offering BI and reputational damage, said David Rees of London-based broker RKH. “Those are the covers that will lead to the upturn in Europe.”

Switzerland-based insurer Zurich concedes that the purchasing drivers in Europe will not be the same as in the US. This summer Zurich launched a standalone cyber product in Europe and is working on a new UK and international product.

“It is clear that privacy is not the focus for international clients…business interruption will be more of a driver for buying cyber insurance in Europe,” said Jeremy Smith, Head of Technology at Zurich Global Corporate.

In the past, some European insurance buyers have criticised insurers for being slow to develop cyber insurance, especially outside the US and beyond the scope of privacy cover.

The insurance industry is currently not fully meeting the needs of large corporates, agreed Mr Beeson, noting the gaps that exist in both property and cyber insurance.

“But things are changing and there is work going on behind the scenes, particularly in the Lloyd’s market. Things are moving in the right direction and cover is starting to

broaden out,” he said.Property damage and business

interruption caused by a network outage or a security breach are areas that insurers are starting to work on, said Mr Beeson.

London market insurers are going further and combining property with cyber BI cover to respond to demand for broader bespoke BI insurance, he added. For example, Lloyd’s insurer Kiln is offering bespoke cover for intangible and tangible property exposures linked to cyber triggers. It has even developed specific cover for SCADA systems.

“The insurance industry is not providing as broad a cover as it should. It is not covering the full range of cyber exposures and few insurers have had an appetite for cyber BI,” said Kiln’s Ms Khudairi. “Kiln is broadening cover to meet clients’ demands,” she added.

CAPACITY GROWINGLloyd’s underwriters have demon-strated a willingness to underwrite property damage and BI exposures, but the capacity for large facilities is not yet there, according to Stephen Wares, Cyber Practice Leader for the EMEA region at broker Marsh. The broker is working with both cyber and property markets to find a solution, he said.

Insurers will ‘follow the money’ and go where there is the greatest demand, said Mr Wares. But client concern over business interruption has been surprisingly low. A recent

Marsh survey of its clients found the threat was ranked well behind that of a data breach, damage to reputation and loss of intellectual property.

However, demand for cyber BI insurance should increase as more organisations recognise the high dependency on IT for trade, said Mr Wares.

Insurers are looking for events other than data breaches to target their products, such as business continuity issues caused by a security event, negligence or accidental damage. “This is a market where we can expect movement as insurers respond to clients’ demands. If the demand is there and risk managers can articulate it, insurers will respond,” said Mr Wares.

Even in the US demand for property damage and business interruption cover will eventually emerge. One possible driver could come from the US government, which is particularly concerned with the threat of cyber risks to critical infrastructure.

The US administration is interested to explore what role insurance could play in raising cyber security standards, explained Mr Beeson, who recently met with President Obama’s security advisers on this very issue.

The US cyber insurance market, which is now worth around $1bn, is based around data breach and privacy insurance, but that may change with time, according to Zurich’s Mr Smith. “This type of cover is an easy sell for brokers in the US, therefore the market has not focused on the more complex area of cyber-related business interruption,” he said.

Mr Smith sees potential for continued growth in privacy-related cyber insurance in the US. But once that market becomes saturated, interest in BI will also grow, he predicts. “The exposure is there but the product is not pushed hard,” he said.

Some even believe that the property market will eventually assume cyber-related property exposures.

“First party property damage and business interruption cover will be absorbed into property programmes,” said Beazley’s Mr Bantick. “Breach response will continue to take priority and ancillary policies will become less important,” he added.

Continued from Page one

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NEWS18 Continued from Page One

Ferma believes there should be four pillars of certification—knowledge, experience, ethics and CPD (continuous professional development).

A small steering group focused on certification that includes Ferma board members Mr Dennery, Ms Graham, Isabel Martinez and Jo Willaert, supported by Marie Gemma Dequae and Pierre Sonigo, recently sat down and devised a project and governance structure for planning towards certification.

The project work has been cut into a number of sub projects to reflect these four pillars. A further group is looking at the business model and how to make the scheme work in practice, including the financial side of things.

“In these project groups we are also going to involve our member associations because although you might not want to work by committee, it is certainly going to be worked by consultation. We are very keen to make sure our members are engaged and help us drive this work,” said Ms Graham.

She explained that Ferma may work with a third party to help deliver and achieve certification because this type of process and administration is not what the federation is set up to deliver.

“But what we can do is bring the associations together, and we have the profile and vision through liaison with our associations and their members of what we and they want. The next stage is to get on with it,” she said.

Ferma’s certification scheme will not preclude its member associations from delivering their own qualifications.

Nor will the federation expect those risk managers with pre-existing qualifications and experience to start afresh. “We need to establish how and at what level these might converge into the agreed certification standard,” said Ms Graham.

“It is very important for everyone to realise that whatever education or qualifications you have is not going to be thrown away or disregarded. You may need to do some extra work to get certification but what you have will have a value,” she added.

Certification will focus on risk managers rather than insurance managers, but the federation believes that should not exclude insurance buying professionals from going down the certification route.

The principles that you need to manage insurance would, one would hope, relate closely to managing risk, said Ms Graham. “So even if you are an insurance manager, it shouldn’t preclude you from seeking certification.”

“The theme all the way through certification, as with any Ferma objective, is doing things with and on behalf of our member associations that demand a collective response where Ferma can add a unique value,” she stressed.

When announcing that Ferma was going ahead with pan-European risk manager certification, Mr Dennery said the initiative is intended to give chief executives and boards confidence when they appoint a risk manager.

BOTTOM LINEMs Graham reiterated this fundamental reason for certification, stating that it would raise the profile and professionalism of risk management.

Evidence suggests that in this complex and ever faster-moving world, the profile of risk management and risk managers is set to increase, she said.

Adding that risk managers will potentially become more involved in board or ‘C-Suite’-level activities, and even sit on the board in some cases. “A certification that you can hold up as a recognised credential can only help your cause. We are confident its recognition will be of value.”

Ferma’s member associations gave the federation approval to move ahead with its plans to certify European risk managers, having been assured that they will play a major role in the process.

There are currently eight Ferma national associations that already provide education or are affiliated to universities or educational bodies, while others are looking at this possibility, explained Mr Dennery when announcing the scheme.

Three of Europe’s largest national risk management associations—AMRAE, the DVS and Airmic—told CRE they

support the certification scheme and will contribute to drawing up the core competencies on which it will be based.

However, the German and UK associations say they do not plan to offer certification to their members. Airmic suggested delivering certification that is both credible, professional and carries weight beyond the risk management community will be a real challenge.

France’s risk management association, AMRAE, said it firmly supports Ferma’s project to introduce European certification for risk managers.

It CEO, Bénédicte Huot de Luze, told CRE that the association has already taken steps to help the project move forward.

In early October it unveiled a framework for risk management that it believes could serve as a reference for the profession across Europe and form the basis of Ferma’s planned certification scheme.

AMRAE believes its newly released framework could be used by Ferma as it draws up the standards on which to base certification.

Ferma said it is ‘delighted’ to have such support.

“We believe that a European-wide certification programme will be very interesting for our members,” Ms De Luze said.

The reasoning is straightforward enough. A French, or other national certification, is a valuable asset for any risk manager, but predominantly only in their domestic market, explained Ms De Luze.

With companies increasingly operating across Europe, a certification recognised across the continent will extend the opportunities for professionals working in the risk management sector, she added.

She noted, however, that training programmes must be developed by each national association as they are in a better position to assess the legal, compliance and cultural issues specific to each country.

Consequently, AMRAE believes the European scheme will complement national initiatives.

For over a decade now the French

association has run a well-developed education programme, called CEFAR, that issues certification for participants.

Soon CEFAR should be granted a new status. AMRAE is set to apply to the French Ministry of Education for authorisation to turn the certification into a diploma, a type of degree that has higher academic value.

AMRAE intends to integrate European certification as a complement to its CEFAR programme. “You will be able to get a French diploma in risk management in the first place, and after that the European certification,” said Ms De Luze.

PROVIDE DEFINITIONMs De Luze said that it is not clear yet what assessments will be required by Ferma to achieve certification or whether they will require amendments to the CEFAR curriculum.

Rüdiger Auras, Managing Director of the German Risk Managers’ association Deutscher Versicherungs-Schutzverband (DVS), said the Germans support Ferma’s pan-European certification project.

He believes certification is needed to better define the term risk manager and the core tasks and training necessary to carry out the role.

“Ferma does not want to educate risk managers itself, but to set standards for education and advanced training. It wants to define what knowledge a risk manager should have. All member associations have agreed to pursue the project along these lines. Now the task is to define the contents and to launch the concept in the individual countries,” he said.

“What Ferma is developing is a European standard, but the member associations must get involved. The standard has to be adapted to the local needs in the individual countries,” he continued.

The DVS does not offer risk management training itself and has no plans to become an educational body, Mr Auras made clear.

As such it will look to education’s bodies and universities, such as the TÜV Nord that already offers risk management training and certification in Germany, to deliver a Ferma

approved certification programme. Other Ferma members’ associations

not offering training themselves will be in the same boat.

But he stressed that ‘it is important for DVS to contribute to developing a risk management profile for Germany’ and therefore to drawing up Ferma’s core competency framework.

Mr Auras reiterated Ms Graham’s point that risk professionals with an insurance background could, and indeed should, seek certification under Ferma’s risk manager scheme.

“In Germany we generally have insurance managers who have been integrated into risk management. I think the certification is also interesting for insurance managers as advanced training to qualify them for other areas,” he said.

Airmic’s John Hurrell confirmed that the UK risk management association supports Ferma’s plans to draw up the core competencies on which certification should be based. “This is a valuable project which we support and will contribute to,” he said.

The planned certification scheme meets a need that is probably more acute in countries that do not have ready access to existing educational and qualification bodies, such as the Institute of Risk Management, he added.

However, he was keen to point out that delivering pan-European certification that is objective, well resourced, consistent and professional will be a challenge.

He also stressed the difficulty in ensuring that the certifying body has credibility beyond the risk management profession and carries weight with employers and top management.

“I think these aspects will be a challenge for any professional body, including Ferma, but I know they will be addressing these challenges,’ he said.

Mr Hurrell noted that Airmic has no plans to offer certification or accreditation to its members.

“Many of our members have qualifications with CII or IRM and nothing Ferma is doing is likely (or intended) to compete with these bodies. Airmic focuses on training through our Academy but these workshops do not offer any certification,” he explained.

CERTIFICATION: Members will engage to ensure scheme worksContinued from Page one

how to boost growth by completion of the digital single market.

In a letter sent to heads of state and government on 27 September, President Barroso underlined the importance of the data protection reform for European citizens’ and businesses’ confidence and trust in the online economy. He called for a swift adoption of the data protection reform before the end of this parliamentary term.

REFORM PROGRAMMEThe package was originally proposed in January last year as the Commission proposed a comprehensive reform of the EU’s 1995 data protection rules to strengthen online privacy rights and boost Europe’s digital economy.

The Commission’s proposals update and modernise the principles enshrined in the 1995 Data Protection Directive.

The Commission reckons that the value of European citizens’ personal data has the potential to grow to nearly €1 trillion annually by 2020. Higher standards of data protection is therefore a business opportunity, said the EC.

The Commission said that data

protection reform will help the digital single market realise this potential through four main innovations. These are:n One continent, one law: The

regulation will establish a single, pan-European law for data protection to replace the current inconsistent patchwork of national laws. Companies will deal with one law, not 28. The benefits are estimated at €2.3bn per year;

n One-stop-shop: The regulation will establish a ‘one-stop-shop’ for businesses. Thus, companies will only have to deal with one single supervisory authority, not 28 and therefore make it simpler and cheaper for companies to do business in the EU;

n The same rules for all companies—regardless of their establishment. Today European companies have to adhere to stricter standards than those established outside the EU but also doing business on the Single Market. Under the reform package, companies that are based outside of Europe will have to apply the same rules. Data protection authorities will be able to fine

companies that do not comply with EU rules with up to 2% of their global annual turnover. “Privacy-friendly European companies will have a competitive advantage on a global scale at a time when the issue is becoming increasingly sensitive,” stated the EC.The EC said that there is clear

evidence that European citizens want this reform. Evidence cited includes:n Nine out of ten Europeans (92%)

say they are concerned about mobile apps collecting their data without their consent; and,

n Seven Europeans out of ten are concerned about the potential use that companies may make of the information disclosed.“The data protection reform will

strengthen citizens’ rights and thereby help restore trust. Better data protection rules mean you can be more confident about how your personal data is treated, particularly online. The new rules will put citizens back in control of their data,” stated the Commission.

One key element of the package is that it will establish the right to be forgotten.

“When you no longer want your

data to be processed and there are no legitimate grounds for retaining it, the data will be deleted. This is about empowering individuals, not about erasing past events or restricting freedom of the press,” explained the commission.

The rules will also establish a right to data portability, which will make it easier for individuals to transfer their personal data between service providers.

‘EXPLICIT CONSENT’And, when consent is required to process data the individual must be asked to give it explicitly. “It cannot be assumed. Saying nothing is not the same thing as saying yes. Businesses and organisations will also need to inform [individuals] without undue delay about data breaches that could adversely affect [them],” stated the Commission.

The EC stressed, however, that the data protection reform is geared towards stimulating economic growth by cutting costs and red tape for European business, especially for small and medium enterprises (SMEs).

For example, SMEs will be exempt from the obligation to appoint a data

protection officer so long as data processing is not their core business activity.

The EC also said that notifications to supervisory authorities of breaches are a formality and red tape that represents a cost for business of €130m per year. The reform will scrap these entirely.

Where requests to access data are excessive or repetitive, SMEs will be able to charge a fee for providing access.

SMEs will also have no obligation to carry out an impact assessment unless there is a specific risk, explained the EC.

“The rules will also be flexible. The EU rules will adequately and correctly take into account risk. We want to make sure that obligations are not imposed except where they are necessary to protect personal data: the baker on the corner will not be subject to the same rules as a (multinational) data processing specialist. In a number of cases, the obligations of data controllers and processors are calibrated to the size of the business and to the nature of the data being processed. For example, SMEs will not be fined for a first and non-intentional breach of the rules,” added the EC.

EC: Data package intended to build consumer trustContinued from Page one

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Please call us for more information: +44 (0)203 451 3259 or +49 (0) 89 3800 2236

www.agcs.allianz.com

With you from A - Z

The material contained in this publication is designed to provide general information only. Please be aware that information relating to policy coverage, terms and conditions is provided for guidance purposes only and is not exhaustive and does not form an offer of coverage. Whilst every effort has been made to ensure that the information provided is accurate, this information is provided without any representation or warranty of any kind about its accuracy.

From ground-breaking to sky-scraping.

Property insurance solutions on a new global scale.The AIG Global Property Division is a world leader in providing insurance, risk management and loss control services for commercial property and energy risks around the world. Now we’re thinking even bigger. With larger per-risk capacity, new resources and capabilities worldwide. Whether your needs are local, multinational or global, our industry specialists can coordinate consistent service from engineering to claims to risk transfer solutions designed to meet your specific needs. To learn more, visit www.AIG.com/globalproperty

Insurance and services provided by member companies of American International Group, Inc. Coverage may not be available in all jurisdictions and is subject to actual policy language. For additional information, please visit our website at www.AIG.com. AIG Europe Limited is registered in England: company number 1486260. Registered address: The AIG building, 58 Fenchurch Street, London, EC3M 4AB.

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Commercial Risk Europe — November 2013

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Transcript of Commercial Risk Europe — November 2013