Aviva reveals how risk management can balance the risk-reward ratio

Aviva reveals how risk management can balance the risk-reward ratio | Insurance Business Canada

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Aviva reveals how risk management can balance the risk-reward ratio

How big a priority is it – and how big a priority should it be?

This article was produced in partnership with Aviva.

Desmond Devoy, of Insurance Business Canada, sat down with Fred Shurbaji, managing director of Aviva Business, to discuss why risk management implementation is being overlooked, according to Aviva Canada’s 2023 Risk Insights Report, and what brokers can do to change that.

Companies may agree that risk management is important – but those same companies are not necessarily following through or asking for help when it comes to risk mitigation.

Aviva’s Risk Insights Report has revealed that less than one in three businesses polled are carrying out risk assessments. The study also found that only 29% of commercial businesses are currently contacting their broker or insurance company for help, advice, and support when it comes to mitigating risk.

“Risk itself presents itself differently for each business,” said Fred Shurbaji, managing director, Aviva Business Insurance. “This is an opportunity for us as an industry – for brokers and insurers – to communicate with customers and help them better understand their exposures and the tools available to them today to better protect themselves from these growing risks.”

This is the second year that Aviva has conducted the risk insights report, which surveys 1,500 Canadian businesses.

“Businesses are feeling the effects of emerging and persistent headwinds,” he said. “But with the right contingencies in place, businesses can certainly mitigate risk.”

Aviva’s risk management survey – what did it reveal?

The survey of business owners, key decision makers and executives across nine industries (including manufacturing, retail, transportation, and hospitality) highlighted how businesses now perceive risk through an evolving lens. The pandemic undoubtedly had a huge impact on the risk approach of many companies – and as some normality returns, it is encouraging to see that while risk doesn’t define businesses, they are at least being more considerate in their approach towards it.

Aviva’s 2023 report found that 70% of businesses planned to increase their focus on risk management activities, and the longer a company had been operating, the more likely they were to engage with risk management. However, there remained a lack of proportionate action, with fewer than one-in-four conducting insurance risk surveys and less than a third of businesses consistently carrying out security, health and safety, or business impact assessments.

Understandably, risk management is competing for the attention of owners and managers alongside other demands, such as client retention, business growth, cyber threats, sustainability, and supply chain issues, to name a few. On top of this, budget limitations are another reason why risk management ideals do not always match up with reality, for one-in-three businesses surveyed.

Indeed, businesses are feeling strained – with economic uncertainty listed as the top risk in the current report, despite not having been featured in the top five risks businesses identified last year. Other risks highlighted in the current report included business disruption, public health events, a shortage of a skilled workforce and cyber threats.

Leading the way for Canadian businesses

Still, amid chaos (or risk) there is opportunity for insurers and brokers alike to help businesses of all sizes prepare for the future.

“We have a significant opening here to become more proactive both as insurance companies and brokers to help customers prevent losses and better understand that we can be part of their loss mitigation plans,” said Shurbaji. “Aviva has a lot of tools and resources at its disposal, and we also have a dedicated Aviva Risk Management Solutions team, who are there to help and support customers and brokers to mitigate risks.”

Risk management is also a form of insurance that is proving itself to be a necessity, rather than choice, time and time again. As such, there is an opportunity to educate customers and strengthen relationships through outlining, and mandating, required assessments.

“The pandemic has been an eye-opening experience for businesses and has raised awareness of the importance of planning and risk management,” Shurbaji outlined. “As an industry we can play a bigger role in supporting customers. Often, we’re still viewed as the go-to resource at the time of a loss. There is more insurers and brokers can do to help customers and be an integral part of risk assessments too, to prevent loss entirely, or at least diminish it, in the future.”

Future trendlines

Businesses need a strong plan in place to allow them to better adapt and pivot in the face of changing circumstances – something that has been emphasized by the rapid changes of the last three years.

For Shurbaji, the survey results show that there is a “disconnect between intent and action. I think most companies have all the right intentions though,” but by delaying and ignoring the problem, when it is perceived that the risk is ‘not immediate’, it becomes a risk that tends to be ignored.

Still, he has high hopes for the future.

“The Aviva Risk Insights Report is a great barometer to identify what’s top of mind for Canadian businesses and an excellent tool that provides insights to insurers and brokers on what they need to focus on to support customers going forward,” he said. “We hope to see a big shift in more companies taking measures to mitigate risk by turning awareness into action in the next survey.”

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