One chief risk officer (CRO) we talked to recently suggested that he can usually predict many of the key sticking points in strategic discussions around risk. This gives him a leg up, because he develops a series of “elevator speeches” in anticipation of those sticking points.
Many risk and risk management issues have significant technical elements. CROs are sometimes tempted to bring in too much of these technical elements if they are called to speak off the cuff. The idea of prepared elevator speeches, concise responses to complex questions you could give in the time you share with someone in an elevator, is a smart way to make sure that the CRO mentions all of the important points on a topic without going into unnecessary technical details.
The topics the CRO would need to address may differ depending upon the ERM functions that are included in the ERM program at your company. We have already written about this in more detail, and you can read more here. In the meantime, some examples are:
Individual risk management
- The capacity for company growth within rating-agency constraints and its relationship to individual risks
- Managing the cost and benefits of risk controls
Aggregate risk management
- Basic differences between internal capital model and regulatory/rating agency capital models
- The capacity for company growth within risk appetite and tolerance
Risk reward management
- How the risk model is making our decisions
- Competitor risk analytics and whether they are more effective
All ERM programs
- ERM is slowing our decision making processes
- The company risk culture needs strengthening
Some of these topics are a challenge to ERM, while others are educational opportunities. In all cases, CROs would do well to have elevator speeches in mind to make sure that their first responses touch the most important points.
The following are examples of elevator speeches for two of the topics above.
We’re facing a competitive disadvantage because our competition has superior data analytics capabilities. Their more accurate pricing means they’re writing the better risks at lower prices, leaving us with worse risks and inadequate premium. We have to do something in a deliberate, focused way. Companies that have rushed into advanced analytics too quickly often run up high staff and system costs without creating value. Some companies even make their situation worse by applying advanced analytics results the wrong way. Engaging an expert advisor who has helped other companies make a successful transition is our best route forward.
I’m excited about our new strategic direction, and I see areas where our risk culture needs strengthening to fully support and execute it. Tone from the top is critical. As we explain the strategy to our colleagues and build engagement and support, we need to include risk culture messages that underscore the strategic framework. Our colleagues are hearing that leadership wants to see growth, and wants to expand our use of higher policy limits. Given our risk appetite parameters, we should include phrases like “don’t bet the company on a single territory” and “maintain our strong surplus ratio as we grow” in conversations with colleagues at every opportunity.
While it is unlikely that we touched on the exact points that you need to make if these particular topics come up, you can see from these how an elevator speech might be constructed. Writing these speeches takes several iterations, editing away extraneous words and ideas. Try saying your draft speech aloud or even to a colleague. You want these speeches to be “easy listening” so they must be easy for you to remember and to say. And thanks to the CRO who gave us this suggestion.
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Paul Headey is Willis Towers Watson’s Asia Pacific Life practice leader, Insurance Consulting and Technology.
Esther Huang is a Director at Willis Towers Watson Singapore and the Market Leader for Thailand and Vietnam.
Dave Ingram is an Executive Vice President of Willis Re, specialising in theory and practice of ERM for insurers.
Mark Mennemeyer is a senior Enterprise Risk Management practitioner in Willis Towers Watson’s Insurance Consulting and Technology business.
Alice Underwood is Global Leader of Insurance Consulting and Technology at Willis Towers Watson