GRC challenges in the Insurance Sector
Ongoing uncertainty in the macroeconomic environment, as well as future regulatory changes, will continue to challenge firms’ GRC management.
Data Protection and Cyber Security – The availability of sophisticated hacking tools has significantly increased the risk of data breach. With increased focus on customer experience, the multitude of online interactions with customers and the need to protect, as well as analyze, the personal nature of data collected digitally, complicates cyber security. Insurance companies collect vital confidential information from their customers which they must keep safe.
Global Governance – If the insurance company operates on a global level there is an increased focus on global coordination, global regulation and compliance issues that include systemic risks and dealing with capital standards. Several issues present at state/national level such as annuities, data breaches and cyber security will also occur globally. This calls for need to monitor the compliance from multiple locations.
Increase and Changes in Regulations – There has been an increase in the number of compliance for insurance companies making it more difficult to duly adhere to all these compliance.
Operational Risk – The operational risk includes actions taken by employees. These actions include indulgence in fraudulent activities by the employees. It also includes mistakes by employees which results in breaking of the law or non-compliance to the prescribed regulations.
Annuities – Annuities are more complex than other insurance products, thereby increasing the chances for misrepresentation and misunderstandings. Insurers need to keep a close watch on their annuity in order to address the risk of misunderstanding & misrepresentation.