Integrated Risk Management and the Role of the Risk Manager (Revista Ibero-Latinoamericana de seguro)

Summary

• A survey of 1,780 firms produced 379 completed questionnaires, a response rate of 21.3%.p.3
• 34.6% of responding risk managers hold the Associate in Risk Management designation and 66% have a risk management background.p.5
• Roughly 41% of risk managers believe their firms will engage more actively in integrated risk management in the next five years.p.7
• Only 6.6% of firms have a Chief Risk Officer, against 25.7% of finance and insurance firms.p.7
• 46.7% of all firms use derivatives, rising to 65.3% among firms with revenue above $2B.p.8
• 70.4% of firms use multi-year contracts and 71.5% expect to in the next five years.p.11

Key insights

1. The most common reporting line for the risk manager is the Treasurer (32.7%), followed by the CFO (23.7%).p.7
2. The most common areas where risk management and finance departments interact are alternative risk-financing programs (43.2%) and mergers and acquisitions (37.4%).p.6
3. Only 37.7% of risk managers expect their firms to use derivatives actively in the next five years, compared with 46.7% using them currently.p.9
4. Currency risk is managed with derivatives by approximately 62% of derivative users, and interest rate risk by 58.8%.p.10
5. Use of captives is expected to rise from 38.3% to 50.9%, and finite risk or financial reinsurance from 26.6% to 52.8%.p.11
6. Blended contracts combining hazard and financial risks are used by 7.1% of firms, with 29.3% expecting to use them in the next five years.p.11
7. The main reason for using finite risk or financial reinsurance is to set a cap on self-insuring or captive liability (63.4%).p.12