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Risk Insider: Tony Boobier

Risk Managers: Change is Good

By: | February 23, 2018 • 3 min read
Tony Boobier is an experienced independent consultant focusing on insurance analytics. An international speaker, commentator and published author, he lies awake at night thinking about the convergence of insurance and technology. He can be reached at [email protected]

We are more aware of change than ever before. Whereas once we became only occasionally aware of what was happening, through watching television, checking out the daily newspaper or through word of mouth, today we are constantly bombarded with new information, most often through our mobile devices.

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For many of us, keeping ‘up to speed’ with current affairs seems to have become an addiction. We convince ourselves that something might have happened which is important and could affect us personally. Not only have we become ‘Change Junkies,’ we have all now become ‘Change Experts.’

Some people even make professions from the topic of change – such as thought leaders, change managers or even risk experts. We often look back fondly with rose-tinted glasses at bygone days, a time when we think there seemed to be more stability and certainty about life. But in reality our recollections are often flawed. Invariably we forget times of relative austerity due to budgetary debts, higher levels of infant mortality, less reliable medical treatments, and less transparency in our political and financial systems.

I predict that through innovative business models, refinement around coverage levels, and a continuous move towards proactivity, the insurance industry will still fundamentally fulfil the same role. That role is one of providing safety and security in a continually volatile world of uncertain climate, finance and behaviours? With this in mind, we should take comfort that, at least, this one thing won’t change.

The same ‘rose-tinted specs’ also take on a darker hue as we look into to the future, with our own forecasts and those of others often tainted by the gloomy predictions of science fiction.

Maybe it’s time to be more positive about the future. Instead, shouldn’t we think about our data-driven prospects as being bright ones?

  • Greater customization of education through personalised analytics at all levels of our careers, providing us with a better chance of reaching what was once thought to be our full potential, but then increasingly exceeding it.
  • Increases in automation of mundane systems initially reducing, and then removing entirely the risk of making mistakes, as well as improving accuracy.
  • Intelligent systems replacing the drudgery of mind-numbing production work, tasks which increasingly belong to a by-gone era.
  • Robotic companionship, even in old age, which may not be so strange after all, especially for those who have relied on computers throughout their entire lives.

Isn’t mankind destined for something grander than just fulfilling what is rapidly becoming an outdated ethic of ‘hard work?’

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Whilst we tend to focus on changes happening in the workplace, inevitably there will be societal changes. We’ll have more time on our hands, but what will we do with it?  Doesn’t the Law of Unexpected Consequences have a role to play? The expression, coined by U.S. sociologist Robert K. Merton, suggested that ‘unexpected consequences’ fall into three categories – unexpected benefit, unexpected drawback, and a ‘perverse outcome’ (or ‘backfire’), when an intended solution unexpectedly makes a problem worse.

The role of risk managers is likely to evolve beyond their existing responsibilities, to include managing those unexpected drawbacks and backfires. Regulators – named after the regulating device on an old steam engine to prevent overheating – will become pivotal in avoiding ‘overheating’ of the economy and society.

Isn’t mankind destined for something grander than just fulfilling what is rapidly becoming an outdated ethic of ‘hard work’?

As for the insurance industry itself, won’t it also will change with the times in terms of products, services, and in new essential skills needed by its employees (such as imagination, operational agility, and ability to interact with the system)? Underwriting, claims and distribution will inevitably become digitally transformed.

My prediction is that, through innovative business models, refinement around coverage levels, and a continuous move towards proactivity, the insurance industry will still fundamentally fulfil the same role. That role is one of providing safety and security in a continually volatile world of uncertain climate, finance and behaviours. With this in mind, we should take comfort that, at least, this one thing won’t change.

More from Risk & Insurance

More from Risk & Insurance

Black Swans

Black Swans: Yes, It Can Happen Here

In this year's Black Swan coverage, we focus on two events: An Atlantic mega-tsunami which would wipe out the East Coast and a killer global pandemic.
By: | July 30, 2018 • 2 min read

One of the most difficult phrases to digest without becoming frustrated or judgmental is the oft-repeated, “I never thought that could happen here.”

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Most painfully, we hear it time and time again in the aftermath of the mass school shootings that terrorize this country. Shocked parents and neighbors, viewing the carnage, voice that they can’t believe this happened in their neighborhood.

Not to be mean, but why couldn’t it happen in your neighborhood?

So it is with Black Swans, a phrase describing unforeseen events, made famous by the former trader and acerbic critic of academia Nassim Nicholas Taleb.

We at Risk & Insurance® define these events in insurance terms by saying that they are highly infrequent, yet could cause massive damages. This year, for our annual Black Swan issue, we present two very different scenarios, both of which would leave mass devastation in their wake.

A Mega-Tsunami Is Coming; Can the East Coast Even Prepare?, written by staff writer Autumn Heisler, profiles an Atlantic mega-tsunami, which would wipe out lives and commerce along the East Coast.

On the topic of whether the volcanic island of La Palma, the most northwestern of the Canary Islands, could erupt, split and trigger an Atlantic mega-tsunami, scientists are divided.

Researchers Steven Ward, a geophysicist at UC Santa Cruz, and Simon Day of University College London, say such a thing could happen. Other scientists say Day and Ward are dead wrong; it’s an impossibility.

One of the counter-arguments is backed up by the statement that there has never been an Atlantic mega-tsunami. It’s never happened before and thus, could never happen here. See exhibit “A” above, re: mass school shootings.

Viral Fear: How a Global Pandemic Kills an Economy, written by associate editor Katie Dwyer, depicts a killer global pandemic the likes of which hasn’t been seen in a century.

Tens of millions of people died during the Spanish Flu outbreak of 1918.

Why it could happen again includes the fact that it’s happened before. The science on influenzas, which are constantly mutating, also supports just how dangerous a threat they pose to millions of people beyond the reach of antibiotics.

Should a mutating avian flu, for example, spread widely, we could see a 10 percent drop in GDP, mostly from non-physical business interruption.

As always here, the purpose is to do exactly what insurance modelers and underwriters do; no matter how massive the event, we create scenarios, quantify possible losses and discuss risk mitigation strategies. &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]