Lloyd’s challenges market to avoid “compliance silo”

A recent survey of Lloyd’s managing agents found that while 78% said the most important driver of good risk management is business benefit, half of those surveyed felt compliance was the best means of achieving good risk management.
These results are disappointing and signal the need for Lloyd’s market participants to do more than “box ticking”, says Steve Manning, head of risk management for the market. He says Lloyd’s competitors are “waking up to the benefits of an enterprise-wide approach to risk management” and the market’s participants need to take this same approach.
“It’s encouraging to see that only six market companies have embraked on risk management as a result of the FSA (Financial Services Authority) telling them to, but we are still a market that tends to be driven by compliance,” he says. “If you see risk management as being a tick box exercise, you will not derive the true business benefit that risk management can offer.”
Manning hopes to see more Lloyd’s companies appoint chief risk officers, rather than relying on their compliance officer to be responsible for risk management.
He adds that risk also needs to be extended beyond traditional hazards, as evidenced by the recent corporate crises in the U.S. which have been driven by factors other than natural hazards.
The market has developed a risk management framework and language for its franchisees’ use, as well as holding two “Risk and Reward” conferences Manning’s comments came at the most recent of the two, held last week in London.
Manning did point to improve risk management within the market, and the survey indicates 93% of managing agents have undertaken a detailed risk assessment of their companies.