The primary a part of this weblog sequence launched Accenture’s strategic resilience framework. On this weblog, I’ll increase this introduction to take you thru our framework step-by-step utilizing the lens of sustainability and ESG (atmosphere, social and governance).
Sustainability and ESG traits are big impression drivers in insurance coverage—they’re additionally among the many most advanced, unknown and disruptive. Tackling this situation can really feel overwhelming due to how unclear the longer term is: How will local weather change speed up the frequency and severity of catastrophic (CAT) occasions? How will local weather change together with the decision for extra social justice impression the financial system, and by extension, client funds and preferences? Will stakeholder capitalism profoundly alter the present financial system and political panorama?
Present traits impacting sustainability in insurance coverage
Some traits current alternatives for insurers, whereas others current challenges—each are vital to arrange for. Under, I’ve outlined 5 sustainability and ESG-related traits presently impacting the insurance coverage business (and the world). This can be a high-level, small snapshot of the potential impression of those traits.
Use the unknown to maneuver from traits to situations
There’s a actual danger to ignoring these sustainability traits in insurance coverage—and an actual alternative to answer them. Trying on the alternatives within the North American P&C market, we discovered that ESG-related traits are projected to drive a $206 billion alternative within the subsequent 5 years. If these traits speed up, that chance may improve to $385 billion.
*Worth at stake consists of each new premium alternatives getting into the market and legacy premium shifting to new product choices
If not responding to those sustainability and ESG traits isn’t an possibility, what’s a enterprise speculated to do when the way forward for these traits stays unknown? The reply is situation planning by means of a strategic resilience framework.
Since these traits are primarily based on the “social,” “environmental” and “governance” items of the PESTEL framework, we will create a graph to grasp what occurs if these classes speed up or decelerate. (Notice: Governance combines political and authorized, and is built-in into the social- and environmental-focused situations).
This actually is the center of strategic resilience. By their nature, traits are a high-level vantage level as a result of the main points of how they play out may change at any second. Strategic resilience is designed to resist this uncertainty. By what is going to occur if these traits speed up, companies could make long-term choices to build-in resiliency from the beginning of their technique planning.
Flip situations into an actionable roadmap utilizing Accenture’s strategic resilience mannequin
The purpose of situations is to arm what you are promoting with information. Once you envision a world the place a development strikes sooner or slower, you give your self a spread of potential situations to work with when deciding on a strategic roadmap. So then how do you identify which situation(s) to observe?
The longer term world is just one piece of the puzzle. You continue to have the present actuality of the development to take care of, and also you even have the fact of your present enterprise state that may affect your resolution. In essence, it’s essential to see how the totally different situations will impression your particular enterprise and the place the best alternatives lie. For this reason we have now constructed a strategic resilience mannequin.
Utilizing our strategic resilience mannequin, we will decide the baseline—the monetary impression of every development on its present trajectory—after which the monetary impression if a development accelerates or decelerates in ESG-driven situations. For instance, primarily based on the chart beneath, our mannequin predicts that there can be a $117B new enterprise alternative within the subsequent 5 years pushed by environmental and social traits. Nevertheless, the combinatorial impact of excessive acceleration of those traits collectively may yield as a lot as $343B. Insurers must have their plans in place to capitalize on these alternatives.
With this data, mixed with business experience, you may make well-informed choices about the way forward for what you are promoting. Trying into the longer term systematically on this means might help you to remain forward of fixing winds, permitting you to faucet into alternatives that your opponents may not acknowledge.
We would not be capable to predict the longer term, however we will predict the vary of future potentialities. This is only one instance of a class—sustainability/ESG—and utilizing our PESTEL framework and strategic resilience mannequin to construct a roadmap that’s each sturdy and versatile. Within the subsequent weblog of this sequence, we are going to analyze our strategic resilience framework from a distinct angle—an business angle.
You’ll be able to contact us for assist in ESG technique in insurance coverage and utilizing our strategic resilience mannequin to construct you a long-term technique roadmap that may hold you aggressive and agile.
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