New world: New risks

Risk and insurance professionals from around the French speaking world gathered in Deauville on 27 January for the 18th AMRAE Les Rencontres, the annual French risk summit, which this year took as its theme “New world : New risks.”

Around 1700 people had booked to attend – 200 more than last year. And according to one delegate, the mood was far more optimistic than a year ago when many businesses were still reeling from the effects of the recession. However, the pressures of the economic downturn are still being felt.

Effects of recession

Michel Yarhi, former chief of the French risk association AMRAE, told StrategicRISK that in a highly dynamic and recessionary risk environment companies are not doing enough to accurately disclose how their risk profiles have changed. “A widening gap between the commercial risks that companies are currently facing and the exposures that they present to their insurers is leaving shareholders exposed,” he warned.

“Organisations are faced with many new risks today," said Yarhi. "One of the greatest is that companies fail to take account of the risks which exist outside their immediate control.” He believes that a problem for risk managers in dealing with this task is that they often lack the seniority to be accurately informed about the rapidly changing risk dynamics that affect their company.

“Risk managers should operate at a strategic level so that they know what is occurring and are able to adapt the company's activities and its controls to the new risks. They should have a strategic influence on the direction of their company,” he said. At the same time he urged companies to avoid being overconfident with their risk management controls and procedures. “We have seen what can go wrong when companies are too confident in their approach.”

Another aspect of the recession was the subject of the workshop - ‘Securing your contracts in times of crisis, a key management decision’ - held by Jean-Michel Paris, director, enterprise risk management at Ernst & Young. There is a lot of pressure in today’s economic climate for companies to sign deals for new business, almost regardless of the contract conditions, Paris explained. “The overall level of control is declining and the workshop looked at how we can claw back a good level of controls in particular contracts,” he said.

Other concerns

Pascal Stopnicki, president of Effisoft, agreed with Yarhi that risk mapping is of particular concern to risk managers in the recession. He said that another major issue, unrelated to the economic environment, is the uncertainty regarding the potential appointment of chief risk officers (CROs).

Although CROs are relatively uncommon outside of the financial sector, the numbers are likely to increase. Stopnicki said that risk managers were asking who would be filling this role. “Is it going to be handled by the risk manager – or the insurance buyer becoming a risk manager – or will the job of CRO go to someone from a different discipline like internal control?” he asked.

Stopnicki also highlighted another concern of risk managers which is non-compliance. “Regulations are increasingly introducing new duties, particularly relating to internal controls, and non-compliance is becoming a huge risk,” he told StrategicRISK.

For the first time, the summit included a training session. The subject – enterprise risk management -was clearly popular, with more than 100 people applying to attend. Jean-Paul Louisot explained that a number of regulations in 2008 and 2009 have confirmed AMRAE’s own view that risk should be looked at across the whole organisation.

Guy Lallour, country manager for XL Insurance in France, added: "Once again the AMRAE conference exemplified the strength and vitality of the risk management and large risk insurance communities in France. In light of the economic challenges, and faced with increasing exposures to newer forms of risks, risk managers need to, more than ever, seek improved effectiveness of their internal controls and the quality and pertinence of their risk information. These unprecedented and challenging circumstances are also a unique opportunity for risk managers to get more visibility and recognition for their essential contribution within their organisations."

President’s perspective

AMRAE president Gérard Lancner told StrategicRISK about some recent developments and the association’s plans for the forthcoming year. Much of the focus has been on taking risk management out of its segmentation and moving it into different sectors. AMRAE has also been working with the French financial services authority, for example looking at terrorism risk and the government sponsored reinsurance pool GAREAT.

Since the latter part of 2008, AMRAE has been fostering a close relationship between risk managers and brokers. Lancner said that this is likely to result in the publication of a new charter in the first half of 2010, covering areas such as the services that risk managers should expect from brokers in terms of placing policies, international programmes and claims management, how the professional broker will evolve, and fair remuneration.

There was a varied and interesting selection of workshops at the conference. However, valuable though these were, for most delegates it was the networking opportunity that meant the most.

Stopnicki said that risk managers were happy to meet suppliers in one place at one time of the year – “it’s an efficient way to do business.” He continued: “People don’t come to the AMRAE meeting to get informed on one topic. They come to get plenty of snap shots of information on lots of different subjects in a very short time and in a friendly ambience. You always come away with something useful.”

AMRAE team announced

The French risk management association took the occasion of the conference to confirm the team that will be leading AMRAE in the next few years. Gérard Lancner of Yves Rocher has been re-elected president, Yvon Colleu of EDF Assurances is treasurer, and secretary general is Jean-Philippe Riehl, Veolia Environment. AMRAE’s three vice presidents are Gilbert Brat (La Poste), Bruno Dunoyer de Segonzac (Bouygues Télécom) and Anne-Marie Fournier (PPR).

Other members of the AMRAE team are: Pierre-Alexandre Bapst (Hermès International); Laurent Barbagli (Lafarge); Laurence Delaire (GDF Suez); Christine Gendrot (Carrefour); Frédéric Lucas (Publicis Groupe); Rémi Pendaries-Issaurat (Accor); Alexandra Pfalzgraf (Schneider Electric); Michel Pozzo di Borgo (Banque de France), and Paul-Vincent Valtat (Port Autonome deParis). Michel Dennery of GDF Suez represents AMRAE on the board of FERMA.