Global Reinsurance Masterclass Series - 7 - Imagining the future - Stay ahead in the reinsurance game through scenario planning
This Masterclass is designed to help reinsurers take control of their future through the foresight technique of scenario planning. This practical managerial tool enables companies in the field of risk management to assess any external uncertainties and develop strategies in accordance.
Looking Into The Unknown Using Scenario Planning
A range of factors mean that risk is becoming ever more uncertain for those in the reinsurance business. Moving into the future, knowing how emergent markets, political instabilities, the financial crisis or even climate change will affect the industry becomes increasingly difficult. The only certainty in the market is that the coming years will bring uncomfortable, precarious and inescapable unknowns.
However, business leaders in the industry of global reinsurance are not powerless in the face of these unknowns. This Masterclass is designed to help reinsurers take control of their future through the foresight technique of scenario planning. This practical managerial tool enables companies in the field of risk management to assess any external uncertainties and develop strategies in accordance with these.
Encouraging managers to scan their environments, pinpoint any areas of concern, and generate realistic images of the future through scenario planning helps businesses to prepare for what might unfold and stress-test different strategies. Divided into a four step process, scenario planning compiles a range of techniques to enhance levels of anticipation in reinsurance:
1. Identify key external trends and uncertainties through brainstorming and discussion, teasing out key unknown areas in the reinsurance industry within an agreed time frame. Carried out within the STEEP framework to classify macro-environmental factors.
2. Determine potential value ranges for the key trends and uncertainties identified in step one and the possible implications of these ranges, encouraging participants to engage in dialogue and imagine upsides and downsides.
3. Develop alternate scenarios based on the projections from step two, having participants engage in extensive discussion to select the main scenario themes, interweaving them into distinct narratives.
4. Evaluate the implications on reinsurance strategies of the narratives developed in stage three, deciding whether your business is fit to handle the scenarios through critical assessment of its business model.
Using this four step strategic planning system, managers can evaluate whether the implications of the narratives generated in step three are unique or common across many different scenarios, and also understand whether they will have a major or minor impact on their business. Being able to do this will allow them to exploit opportunities in the future to develop a sustainable competitive advantage in the reinsurance industry.
This is the last in a series of seven Masterclasses on global reinsurance; you can access the full global reinsurance Masterclass series here.