Bridging the Gap: Risk & Insurance in Investment Firms
The perfect storm
In the fast-paced and ever-evolving world of risk, investment firms must remain vigilant and proactive. Since the global pandemic, the industry has faced a myriad of challenges, including rapid technological advancements, the rise of hybrid working, and a constantly shifting regulatory environment. However, these challenges also present opportunities for growth and innovation.
In 2025, investment firms will continue to grapple with digital transformation. New risks, such as AI-driven process efficiency, deepfakes, and sophisticated vishing attacks, are merging with existing concerns like internal and external fraud, human error, and regulatory changes. To effectively manage these risks, a comprehensive and proactive approach is essential.
Will an umbrella be enough?
A robust framework of implementation guidelines, protocols and procedures is essential for minimizing risk. When combined with insurance, it provides a safety net to mitigate potential losses. Aligning risk to insurance through a diligent process ensures that an organization’s vulnerabilities are identified and adequately covered. Trusted data sources play a crucial role in understanding current risks and emerging trends, as well as analysing both qualitative and quantitative aspects of exposure.
Structuring the optimal risk/insurance program
The optimal insurance structure aligns with business needs and considers risk appetite, available mitigation strategies, and cost. This approach should be supported by reliable data from both internal and external sources. It is important to maximize coverage for insurable risks while understanding that not all risks are insurable. Knowing how your insurance responds to different scenarios is key to effective risk management.
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As well as identifying key business risks, it is important to fully calibrate the potential financial impacts of the risk exposures you have across the business.”
Richard Langdon
| WTW’s FINEX Financial Institutions Wealth & Asset Management Sector lead
“As well as identifying key business risks, it is important to fully calibrate the potential financial impacts of the risk exposures you have across the business. Fully quantifying and qualitatively assessing the risks you face is crucial in order to tailor the measures you have around them, for example the amount of insurance cover you buy to transfer these risks off your balance sheet. Using risk models built around industry-specific historical claims data to inform these decisions is an effective way of building your risk management framework around the actual risks present and is an important feature of WTW’s approach to structuring insurance programmes for our clients.”
At WTW, we help our clients develop a risk and insurance strategy that is grounded in sound methodology and supported by data, ensuring that your insurance is fit for the future of your firm. Reach out to our Risk Specialists to learn more about how we can assist you in navigating this evolving landscape
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