Emerging risks - RIMS Handouts/RIMS 14/ERM008/1400_Langman...Emerging risks Newly developing and...
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Transcript of Emerging risks - RIMS Handouts/RIMS 14/ERM008/1400_Langman...Emerging risks Newly developing and...
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Emerging risks
Newly developing and changing risks with catastrophic consequences
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Speaker 1:
Sandra Burmeier, Senior Risk Manager, Swiss Reinsurance Company LtdSandra Burmeier is a Senior Risk Manager in Swiss Re's Emerging Risk Management team. She is in
charge of managing SONAR, Swiss Re's tool for identifying, assessing and managing emerging risks. Prior to joining Swiss Re in 2010, she has worked as researcher and lecturer in the field of plant ecology and conservation science. She has studied biology and journalism and holds a doctorate in plant ecology.
Speaker 2:
Mark Roberton, Director Risk Management and Insurance, Nexen Energy ULC a wholly owned subsidiary of CNOOC Ltd.
Mark has over 30 years’ experience in the risk and insurance professions. He is involved in several
professional associations including as a board member on The McGannon Foundation, ICM Assurance (Barbados) and the advisory board of Mount Royal University. He sits on a number of insurer advisory panels including OCIL, Swiss Re and AIG Canada. In addition to his day job, Mark has been an instructor at both the Insurance Institute of Canada and Mount Royal University. He has lectured extensively including at the World Petroleum Congress, The Energy School in Philadelphia, Canadian and US RIMS and several captive, risk management, professional and construction conferences. He also co-instructs the Canadian section of the RIMS professional development course on captives.
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What to Expect
After attending this session you should be able to…
•Increase your awareness of emerging risks within your corporation
•Consider potential vehicles to manage and mitigate emerging risks
•Identify the opportunistic side of emerging risks
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EMERGING RISK MANAGEMENT AT SWISS RE
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Swiss Re is a leading and highly diversified global re/insurance company
• Our financial strength is currently rated:Standard & Poor’s: AA-/stable; Moody’s: Aa3/stable;A.M. Best: A+/stable
• A pioneer in insurance-based capital market solutions, we combine financial strength and unparalleled expertise for the benefit of our clients
• We deliver both traditional and innovative offeringsin Property & Casualty and Life & Health that meet our clients' needs
• 151 years of experience in providing wholesale re/insurance and risk management solutions
The “Gherkin”, London
Headquarters, Zurich
Armonk, New York
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Swiss Re is broadly diversified by geography and product line
Swiss Re benefits from geographic and business mix diversification and has the ability to reallocate capital to achieve profitable growth
EMEA AsiaAmericas
40% 39% 21%
11.511.3
6.0
Net premiums and fee income earned1 2013 (USD 28.8 bn)
by region (in USD bn) … and by business segment
1 Includes fee income from policyholders
Source: Swiss Re
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• Reinsurers operate in a risk landscape that is changing faster today than ever before:
- New economic, technological, socio-political, regulatory and environmental developments
- Growing interdependencies
- Evolving liability and regulatory regimes
- Strengthening stakeholder expectations
- Shifting risk perceptions
• This complex landscape gives rise to emerging risks: newly developing or changing risks that are difficult to quantify and whose potential impact on our business is not yet sufficiently taken into account
Emerging risks arise from an ever changing risk landscape
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In the face of change, looking back is not sufficient to prepare for tomorrow's risks
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Today
Foresight information
Tomorrow’sexposure
Historical data
Yesterday’sexperience
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• Dedicated Emerging Risk Management team as part of Swiss Re's Group Risk Management function
• 4 FTEs with diverse educational backgrounds, based at headquarters in Zurich, Switzerland
• Group-wide emerging risk management framework called SONAR
• Purpose: detect early signals of emerging risks to reduce uncertainty and prevent unforeseen losses while identifying new business opportunities and raising awareness
Emerging Risk Management is an integral part of Swiss Re's Enterprise Risk Management framework
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S ystematic O bservation of N otions A ssociated with R isk
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The Emerging Risk Management team owns the SONAR process and is supported by SONAR officers and SONAR experts through a company-wide network.
SONAR is Swiss Re's emerging risk management tool
Input Assessment ImplementationMonitoring &
control
Pre-assessment, prioritisation and clustering of early signals
Consolidation and interpretation (downside, upside)
Publication of emerging risk reports (SONAR SCAN, risk sparks, business sparks)
Horizon scanning
Collection of early signals from various sources
Swiss Re business and staff (web 2.0 platform)
Media, universities, think-tanks
External initiatives on emerging risks
Status monitoring (based on topic owner feedback)
Detailed assessment of topics selected as relevant by Business Units
Definition of follow-up actions (mitigation measures for downside effects, product and/or strategy development for upside effects)
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Time
Emerging risk
Unrealised opportunity Seized opportunity
Uncontrolled risk Controlled risk
Risk
spark Loss
scenarios
Business
plan
Signal is fading
Product and/
or strategy
development
Product
launch and
marketing
Development
of mitigation
measures
Implementation
of mitigation
measures
Emerging Risk Mgmt (ERM) responsible Emerging Risk Mgmt support on demand
UP
SID
ED
OW
NS
IDE
Pre-assessment,
prioritisation and
clustering
Consolidation and
interpretation of
early signals
Think
tanks
Media
Internet
External
initiatives
Univer-
sities
Swiss Re
business
& staffEarly signal
Business
spark
Input Assessment ImplementationMonitoring &
control
SONAR is Swiss Re's emerging risk management tool
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• Ongoing information sharing by means of a Web 2.0 platform
• Annual summary report aimed at management levels and made available for all employees
• Annual update of the Swiss Re Emerging Risk Map (Board level)
• Presentations, webinars and knowledge sharing session sot stimulate discussions, trigger mitigation actions and support strategic planning
Emerging risk information is communicated through various internal channels to raise awareness
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SONAR SCANRecent risk perception
from Swiss Re's
employees (faint
signals)
Swiss Re Emerging Risk MapSenior expert assessment of top
emerging risks for Swiss Re
CRO ERI Risk
RadarIndustry perception of
key emerging risks
Swiss Re's emerging risk portfolio captures
risks on 3 levels:
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Information is shared with external stakeholders to raise awareness and facilitate knowledge transfer
IRGC
Risk governance projects
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CRO Forum
Emerging risk radar & position papers
WEF
Annual Global Risks Report
Client SONAR
External version of the SONAR SCAN report
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Exemplary emerging risk topics featured in recent SONAR publications
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Enhanced humans Air pollutionEpigenetics
Cyber vulnerability Toxic substances and workplace safety
New forms of mobility
Prolonged power blackout
Regulatory fragmentation
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Conclusions
• An ever changing risk landscape gives rise to emerging risks
• In the face of change, looking back is not sufficient to prepare for tomorrow's risks
• Emerging Risk Management is an integral part of Swiss Re's Enterprise Risk Management framework
• SONAR is Swiss Re's tool for identifying, assessing and managing emerging risks
• Emerging risks remain a challenge for re/insurers and their partners, but can also offer new opportunities if managed well
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EMERGING RISK MANAGEMENT AT NEXEN ENERGY ULC
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ABOUT NEXEN
• Nexen is an upstream oil and gas company responsibly developing energy resources in some of the world’s most significant basins:
• UK North Sea
• Offshore West Africa
• United States
• Western Canada
• We are a wholly-owned subsidiary of CNOOC Limited
• We’re strategically focused on three businesses: conventional oil and gas, oil sands and shale gas/oil
• At Nexen, it’s not just what we do that matters − it’s how we get the job done. And the foundation of our growth strategy is the energy and expertise of our employees who are committed to working with integrity and engaging our stakeholders.
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About CNOOC Limited
• One of the world’s largest oil and gas companies, CNOOC Limited:
• holds 4.4 billion barrels in net proved reserves (as of December 31, 2013)
• estimated average daily production in 2013 was 1.12 million boe/d
• invested US$15.3 billion in capital during 2013
• has about 10,000 employees
• trades on the Hong Kong, New York and Toronto stock exchanges
• Headquartered in Beijing, China
• Operates in Asia, Africa, North & South America, Oceania & Europe
• Acquired Nexen in February 2013 for US$15.1 billion
• CNOOC Limited established Calgary as an international headquarters; management of CNOOC Limited existing operations in North and Central America was added to Nexen’s responsibilities.
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What is Emerging Risk?
• Expected, but under communicated
• New construction
• Expected, but under quantified
• Claims
• Knowable, but undervalued
• Pre-Macondo HPHT wells/Rail risk
• Risks beyond our range of knowledge
• The next big thing
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Detection of Emerging Risks
• Being close to the business/others
• Partners in the business (Legal, HSE&SR & etc.)
• General Business scans/WELD/security dashboard/business activity reports
• Strategic Risk Analysis
• Contractual Risk Analysis
• Project Risk Management
• Mergers, Acquisitions & Divestures
• Risk Control Consulting including Hazardous & Operability Study/Analysis (HAZOP)
• Above and below ground reviews
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How are risks Quantified?
• Exposure chart
• Risk mapping
• Expert advice on EMLs, conflagration & contingent exposures
• Risk tolerance and risk appetite thresholds
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Coping with emerging Risks?
• Risk tolerance and retention
• Contractual transfer (besides insurance)
• Insurance
• Captive
• Cases in point • Terrorism post 9-11
• Wind risk in the Gulf of Mexico
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Case study
• Macondo offshore Oil Spill, Gulf of Mexico USA operated by BP
• Explosion on the drilling rig Deepwater Horizon occurred on April 20, 2010, killing 11 workers
• The rig sank on April 22,2010 in water approximately 5,000 feet (1,500m) deep and was located resting on the seafloor approximately 1,300 feet (400m) northwest of the well
• Following the incident, BP started a relief well on May 2, 2010 which would take up to three months to drill
• BP started a second relief well on May 16, 2010
• The well was successfully sealed off from flow into the sea on August 4, 2010 by a “static kill” (injection of heavy fluids and cement into the wellhead at the mudline)
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What did this mean to Nexen?
• The response after the loss:
• Complete review of our insurance coverage resulting in the purchase of additional limits on high risk wells
• Additional assumption of risk due to market response post Macondo loss
• Nexen joined additional pollution response capabilities established by industry
• Extensive work done by our drilling group to assess equipment used on our wells
• Contractual risk analysis and the risk assumption rules have been reassessed; rethink if Nexen wanted to be operator on high risk wells
• Redid Strategic Risk Assessment (SRA) to capture the extreme nature of events that are possible
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Questions, Final Comments and Contact Information
Sandra BurmeierSenior Emerging Risk ManagerSwiss Reinsurance Company LtdMythenquai 50/608022 ZurichSwitzerlandPhone: +41 43 285 9506E-mail: [email protected]
Mark RobertonDirector Risk Management and Insurance Nexen Energy ULC801-7th Ave SW Calgary, AB, Canada T2P 3P7
Phone: 403-699-5172E-mail: [email protected]