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Chubb Insurance gains greater control of risk management
Simplifying compliance with FSA regulations and preparing for Solvency II with UNICOM Focal Point software
Chubb Insurance Company of Europe, part of the Chubb Group of Insurance Companies, provides specialist commercial and personal lines of insurance products. It employs just over 1,000 people and has branches in 12 European countries.
Three years ago, Chubb decided to relocate its European headquarters from Brussels to London. As a result, its operations came under the oversight of the UK Financial Services Authority (FSA).
“The move meant that we had a whole raft of new regulations to comply with – not just for the UK business, but for all our offices across Europe,” explains Brian Hardwick, Vice President and Chief Risk Officer at Chubb Insurance Company of Europe. “In many cases, these new regulations were more detailed and demanding than previous requirements, particularly in terms of managing risk.
“Our existing risk management processes were based on spreadsheets and generally managed centrally at a fairly high level. To meet the FSA requirements, however, we needed to embed risk management at a deeper level and involve many more people from across the business in the process. With more than 1,200 documented risks, more than 3,000 controls, and about 250 people responsible for managing them, a spreadsheet-based approach was no longer viable.”
To meet the FSA requirements...we needed to embed risk management at a deeper level and involve many more people from across the business in the process.
UNICOM Focal Point
Brian Hardwick’s team began looking for a solution that could enable large numbers of users in various locations to collaborate effectively in the management of risks and controls. UNICOM Focal Point proved to be an ideal choice.
“I had a lot of experience with Focal Point in other contexts, and I was confident that we could use it as a platform to meet our requirements,” comments Brian Hardwick. “Although Focal Point is often used to manage software development projects, it’s such a powerful and configurable tool that it can be harnessed for many other purposes. Besides its flexibility, we liked the web-based interface, which would make it easy for users across Europe to log in and access the tool.”
Since most of the people involved in risk management are business users rather than technology specialists, it was also important to be able to create simple, personalized homepages that would give each user a quick view of all the information that was most relevant to them. Focal Point’s sophisticated user management features and versatile user interface made this relatively easy to achieve.
Although Focal Point is often used to manage software development projects, it’s such a powerful and configurable tool that it can be harnessed for many other purposes.
Creating a Solution
The risk management team quickly built a solution that gives users the ability to monitor, assess, and manage risks. The largest user group consists of the 250 users who are responsible for managing and controlling the risks. When these users log in, their Focal Point homepage displays all the risks and controls that they are managing, and links to the most recent quarterly assessments for each risk. It also shows all the relevant dependencies between items, so users can easily find out who manages the controls that relate to their risks (or vice versa).
“If a user feels that one of their risks isn’t being adequately managed by a control, they can use the system to create a proposal for remedial action, and discuss it with the control owner. We often have a situation where, for example, a risk owner in France relies on controls that are managed at group level in the UK. Previously, there was no easy way for risk and control owners to identify each other or work together effectively; now it’s part of everyday working practice, regardless of where the users are based.”
At a higher level, business unit managers use Focal Point to get an overview of all the risks and controls in their department, as well as the specific owners who are responsible for each one. Their homepage gives them a high-level view, with areas colour-coded in red if they need attention. They can then “drill down” to the lower level to see what the problem is and discuss it with the individual risk/control owners.
Finally, the solution provides reports for the company’s top-level executives, providing a summary of the risk management situation across the whole company. If a very serious issue is identified, or one or more business units are struggling to manage their risks effectively, the reports enable the senior management team to identify the problem and intervene directly.
Reaping the Benefits
Better visibility of risks and dependencies leads to faster identification of problems, quicker escalation to executive level, and more effective remediation.
“We have better insight into the whole risk management ecosystem, both centrally and locally,” explains Brian Hardwick. “There have been occasions where we have identified issues that might have been missed with the old spreadsheet-based system, and some major business decisions have been made as a result – for example, restructuring certain areas of the business, and deciding whether products are appropriate for specific markets.”
This improved level of insight is possible because the solution has enabled Chubb to embed risk management into its everyday business processes, giving ownership of risks and controls to people who deal with them on a daily basis, rather than imposing governance from the top down.
“The cultural change is as important as the technological one,” comments Brian Hardwick. “By engaging users across the business, we can control risk from the ground up. Increasingly, regulators want to see this kind of detail, so it makes it easier for us to comply with the FSA requirements, and puts us in a good position for new regulations such as Solvency II.”
We have continued to develop the Focal Point solution, and we have never yet come across a risk management requirement that it couldn’t meet.
Adapting to Meet Solvency II Requirements
The flexibility of the solution is also valuable in this respect, since it enables Chubb to extend its risk management processes to meet new requirements when the regulations change. For example, in addition to the normal qualitative risk assessments, Solvency II also requires each risk to be quantified. Chubb has already adapted the solution to facilitate these quantified assessments and feed the data into the internal model which calculates Solvency II capital requirements.
“We have continued to develop the Focal Point solution, and we have never yet come across a risk management requirement that it couldn’t meet,” says Brian Hardwick. “This means we haven’t needed to invest in additional software or retrain our users. We are also able to manage the whole solution with a relatively small central team instead of having different teams in different countries, so it has been a very cost-effective option. We are very confident that Focal Point was the right choice to support our risk management processes, and we feel sure that other insurers could benefit from the solution too.”
Business challenge Following a relocation of its European holding company from Brussels to London, Chubb Insurance came under the oversight of the UK Financial Services Authority – creating new, more complex requirements for risk management across the whole European organization.
Solution Chubb’s Risk Management Office developed a web-based solution built on UNICOM Focal Point software. Users across Europe can collaborate in monitoring, assessing and managing risks and controls, while senior managers can gain a real-time overview of risk status.
Embeds risk management into everyday business processes, providing the close control and detailed insight that regulators increasingly demand.
Enables risk and control managers across Europe to work together more effectively, revealing problems and ensuring that they are escalated and resolved more quickly.
Provides a flexible platform that can easily be configured to meet new requirements such as Solvency II compliance – avoiding the need to invest in new software or retrain users.