A new report by KPMG has determined that climate change is regarded as the most pressing concern to organisational growth amongst CEOs in 2019, with technological disruption also high on the agenda for re/insurance CEO’s in particular.
The study, which surveyed 1,300 CEOs across 11 key markets and 11 industry sectors, found that climate change ranked top of the list for the first time.
More than three-quarters (76%) of those surveyed said their organisation’s growth would depend on their ability to navigate the shift to a low-carbon, clean-technology economy.
“Climate change has evolved beyond just an environmental issue to a pressing financial one as CEOs are feeling investor and stakeholder pressure to move the world away from a sole reliance on fossil fuels,” said Regina Mayor, Global and U.S. Sector Leader for Energy and Natural Resources at KPMG.
“As we continue to consume energy at a record pace, organizations are thinking about ways to incorporate a mix of energy sources, made up of both fossil fuels and renewables,” she explained.
Looking only at insurance CEOs, KPMG said industry leaders were generally confident in business growth over the next three years, despite a recognition that they must change from within, embrace culture change, technology transformation, and greater customer focus.
Disrupting the marketplace was also at the forefront of CEO concerns, as they strive to instil innovation and cyber controls in their companies, and make the most effective technology and workforce investments.
“To become the resilient insurer for the future, organizations must adopt agile operating models and complementary technology and data capabilities. Our survey findings suggest that, despite the many challenges, insurance CEOs are eager to tackle these opportunities.” Laura Hay, Global Head of Insurance, KPMG International
Despite a strong awareness of emerging risks, KPMG said that insurance CEOs seemed “bullish” about their near-term growth trajectory.
While expressing a muted confidence in the global economy over the next 3 years (65%), they were highly confident in the growth of their industry (85%) and their own company (97%).
Re/insurance CEOs also showed an appreciation of the need for their organisations to challenge and disrupt business norms, particularly in terms of customer centricity.
However, despite their enthusiasm for technology, only 14% of surveyed leaders claim to have already implemented artificial intelligence (AI) in automating their processes.
On a similar note, while 85% wanted their employees to pursue innovation without worrying about the negative consequences if an initiative fails, only 59% believe they already have such a culture in place.
KPMG believes that, to perform an attitudinal transformation effectively, re/insurance leadership must view innovation in terms of a culture and mindset shift, rather than simply the pursuit of new technologies.
“That requires an organization to set up new rules of engagement of their employees and for leaders to model the same behaviors,” the report stated.
“Insurers may consider adopting the growing practice in other industries of ‘borrowing talent’, by which employers embrace contingent labor, and the gig economy, to inject innovative thinking.”
