CSC & Towers Watson Study Reveals U.S. Life Insurers Plan to Improve Enterprise Risk Management Programs
News Release -- March 23, 2010
Study Shows Enhanced Risk-Based Decision Making Will Help Drive More Sophisticated Modeling, Better Reporting and Integrated Technology to Support ERM Activities
FALLS CHURCH, Va., and NEW YORK, March 23, 2010 -- As the financial climate improves, U.S. life insurers say they will invest to enhance their enterprise risk management (ERM) function in 2010 and beyond, according to a joint study by CSC (NYSE: CSC) and Towers Watson (NYSE, NASDAQ: TW), and in partnership with the American Council of Life Insurers (ACLI). The research shows that the ERM function is currently still under development, as most life insurance companies operate under the constraints of limited technology and reporting capabilities that obstruct the accessibility of risk information. Going forward, insurers are expected to reinforce their risk strategy via more robust modeling practices, better alignment of risk metrics with decision making and integrated technology that fosters enterprise visibility.
The study, “Is Your Organization at Risk? A Different Look at Enterprise Risk Management,” examines ways the life insurance industry intends to improve its ERM practices in the aftermath of the global financial crisis. Based on focus groups and surveys of 40 U.S. life insurers, ranging in size from less than $100 million in revenues to more than $10 billion in revenues, the study allows insurers to compare their operations to their industry peers. The study concludes with leading practices insurers can implement in order to close ERM gaps that could put an organization at risk.
While half (53 percent) of the respondents rated their ERM performance as satisfactory or better over the last 12 months, the compelling trend is that these satisfied respondents stressed the importance of improving the ERM function going forward.
“The research findings highlight the need for strong governance with a holistic view and independent level of authority,” said Linda Chase-Jenkins, Towers Watson’s global co-leader of Enterprise Risk Management. “The transformation of the ERM function requires a culture shift in which risk management values are fully embedded in the decision process.”
Respondents indicated a significant increase in technology investment, with some insurers planning ERM IT investment increases of 75 percent or more in 2010.
“As the market recovers, insurers are intending to ‘up their game’ through investments in better technology and improved risk management practices throughout their enterprise,” said Bob McDonald, principal consultant, CSC’s Life Insurance and Annuity Division. “A greater IT investment alone will not be the sole contributor to a winning ERM program; it must be accompanied by a clearly articulated risk appetite, a well-defined risk organization and clear accountability for risk.”
To access a copy of “Is Your Organization at Risk? A Different Look at Enterprise Management,” visit www.csc.com/ermreport or www.towerswatson.com/research/1382.
The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association backed by an industry with more than 200 years of experience protecting American families, workers, and businesses. ACLI represents more than 300 legal reserve life insurer and fraternal benefit society member companies operating in the United States.
ACLI member companies are the leading providers of financial and retirement security products covering individual and group markets. They provide life insurance, long-term care insurance, disability income insurance, annuities, pensions such as 401(k), 403(b), and 457 plans, IRAs, and reinsurance. ACLI's public Web site can be accessed at www.acli.com.
CSC is a global leader in providing technology-enabled solutions and services through three primary lines of business. These include Business Solutions and Services, the Managed Services Sector and the North American Public Sector. CSC’s advanced capabilities include system design and integration, information technology and business process outsourcing, applications software development, Web and application hosting, mission support and management consulting. The company has been recognized as a leader in the industry, including being named by FORTUNE Magazine as one of the World’s Most Admired Companies for Information Technology Services (2010). Headquartered in Falls Church, Va., CSC has approximately 92,000 employees and reported revenue of $16.0 billion for the 12 months ended Jan. 1, 2010. For more information, visit the company’s Web site at www.csc.com.
About Towers Watson
Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. Towers Watson has 14,000 associates around the world and is located on the web at www.towerswatson.com.