Willis Chief Says Anticipation and Resilience Required to Tackle New Risks

Published on Tuesday, 31 January 2012 16:55 Written by TradersHuddle Staff

MIAMI-( Business Wire )-

In an environment of rapidly evolving risks, purely anticipating risk is not enough, said Joe Plumeri, Chairman and CEO of Willis Group (NYSE: WSH) today. Speaking at the World Captive Forum here, the chief of the global insurance broker said organizations also need to focus on building resilience to effectively manage risk and position themselves for long-term sustainability.

In his keynote speech, Plumeri said hallmarks of a resilient organization include acknowledging the difficulty of predicting the future or so called “black swan” events. Rather, he said, organizations need to operate in a dynamic fashion to make adjustments in real-time when a catastrophe strikes, while simultaneously preparing for the future. “In order for companies to build resilience, they need to ask themselves, will we be here in 10 years? will we be here in 50 years?”

The 2012 World Captive Forum, convened this year in Miami, site of the costliest disaster in U.S. history, Plumeri noted. The great Miami hurricane of 1926 resulted in severe human loss and steep economic losses which adjusted for 2010 inflation would total $169 billion, according to data released by NOAA. The event wiped out the city of Miami, largely due to a flawed response, Plumeri said. A leading catastrophe modeler estimated that this storm today would cause an estimated $101 billion in insured losses. Plumeri suggested an event of this scale would draw down a significant portion of the global insurance capacity.

“Traditional property/casualty risks endure, but the nature of risk is changing,” Plumeri said. The top five risks on the minds of business leaders today are not easily solved by purchasing insurance, Plumeri noted, citing examples such as loss of customers, regulatory investigations, and reputational risk. Meanwhile the global marketplace continues to drive other risks including political, supply chain, cyber, and balance sheet risk, he said.

“As the risk landscape evolves and includes both natural and man-made catastrophes, organizations need to build resilience against the unpredictable. Insurance serves as a powerful ally for organizations to tackle these new risks and in many ways, insurance is the bridge between anticipation and resilience,” he said.

The captive insurance industry, born out of the insurance liability crisis of the 1980s, began as an “exercise in anticipation” as risk managers needed solutions when they found the insurance marketplace unreliable. Now captives stand as a testament to resilience, Plumeri said.

“The captive insurance industry has evolved and now offers a robust and effective approach to help firms become resilient in the face of unpredictable risks. Captives play a key role in the insurance industry, offering creative solutions for critical risks,” Plumeri said, citing recent examples where organizations have used captives to manage exposures including trade credit, stock-in-transit and product liability.

About Willis:

Willis Group Holdings plc is a leading global insurance broker. Through its subsidiaries, Willis develops and delivers professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of approximately 17,000 employees serving clients in virtually every part of the world. Additional information on Willis may be found at www.willis.com.

Willis Group HoldingsColleen McCarthy, +1-212-915-8307colleen.mccarthy@willis.comorPeter Poillon, + This e-mail address is being protected from spambots. You need JavaScript enabled to view it.