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APAC Insurers Flag Conduct as Key Risk

APAC Insurers Flag Conduct as Key Risk

by Starling Insights

Starling Insights Editorial Board

Apr 26, 2024


A recent survey by EY and the Institute of International Finance, a Starling Insights partner organization, revealed that insurance Chief Risk Officers in the Asia-Pacific region see conduct risks as their top challenge. 

The survey found that 54% of APAC CROs viewed conduct risk as the biggest threat in the next year, substantially more than the global average of 19%. Cybersecurity and adapting to changing business models also emerged as significant concerns, tied at 46% among respondents. Other prominent threats identified by the CROs were capital allocation, credit risk, geopolitical uncertainty, and environmental risks.

In comments to Insurance News, Walter Poetscher, EY Oceania's Insurance Sector Leader, attributed the heightened focus on conduct risk in the region to recent regulatory changes in Australia, Hong Kong, Malaysia, and Singapore. "With conduct-related regulations established in Australia and several other markets in the Asia-Pacific region, including Hong Kong, Malaysia and Singapore, it makes sense that [risk officers] here would have it as a bigger focus area," he said. 

In response to these risks, insurers have sought to strengthen their operational resilience and adopt predictive capabilities, through the use of AI and other technologies, to identify and address risks proactively. The survey found that 38% of Asia-Pacific insurers are implementing advanced analytics like AI, compared to 22% globally. However, Poetscher stressed the need to balance innovation with strong governance.

"AI holds the potential to improve service offerings for customers and to boost organisational efficiency – risk management included," he said. "However, [risk officers] are aware of the importance of tempering innovation with a consideration of the associated risks, and it will be crucial to establish and implement appropriate governance frameworks and risk management strategies."

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