Implement outcome-based solutions or face irrelevancy

More than 20 risk managers representing trillions of dollars of balance sheet capital are already part of Russell’s Corporate Working Group, looking for new practical outcome-based solutions.

Increasing collaboration and transparency will be part of the connected risk response. In July 2022, Russell hosted an event entitled “How the insurance industry can assist corporate connected risk needs?” The discussion identified 10 key themes that we believe will help shape the industry going forward:

As the global economy has become more interconnected, the risk landscape has become more complex. As a result, the frequency and severity of events that have an interconnected nature (i.e., ripple effects on other areas of the economy) are rising. Consequently, companies are facing direct and indirect consequences of trading in the interconnected economy. This has led to rising balance sheet exposure, as insurance isn’t covering most of the loss, which hampers risk taking as risk appetites are being squeezed, thus stifling opportunity.

We need a way of freeing up balance sheets to enable risk and encourage opportunities that improve return on equity. To conclude, in such an era of complexity and unknown risks, we need calculated simplicity. Hence, we predict the rise of outcome-based insurance.

Suki Basi is managing director at Russell Group