What does the phrase “strategic resilience” call to mind? It most likely makes you concentrate on being ready for the longer term. However how do you put together for an unpredictable future, together with quickly evolving technological improvements, continuously evolving buyer and worker preferences, increasing environmental challenges and growing complexity of presidency laws, simply to call a couple of? And what do you do when the longer term you thought would occur, doesn’t? Or when the longer term you thought would occur in ten years really occurs in 5? Is it potential to arrange for a number of futures?
On this weblog collection, I’ll discover these questions utilizing Accenture’s strategic resilience framework and modelling to point out how situation planning for the longer term shouldn’t be a guessing sport—and it doesn’t must be a purely educational train, both. You’ll be able to, and will, harness the facility of knowledge now we have at this time to construct flexibility and sturdiness into what you are promoting mannequin to thrive now and be ready for tomorrow.
The longer term for insurance coverage is full of uncertainty
It seems, the longer term is tough to foretell. We get a number of issues unsuitable, from election outcomes (Brexit) to know-how developments (what number of autonomous autos are roaming your neighborhood?) and a pandemic that was a shock to the globe.
While you have a look at the insurance coverage business particularly, there are numerous developments which can be exhausting to foretell. Three of the most important are: rising dangers (ageing inhabitants, local weather change and cyber assaults), the sharing financial system (freelancer, auto, dwelling) and the sensible financial system (technology-integrated merchandise). The particular questions inside these areas spotlight simply how unpredictable the longer term is:
- What is going to the lasting influence from the COVID-driven recession seem like to the insurance coverage business (e.g., shifting demand)?
- How are rising dangers going to have an effect on the business within the short-, medium- and long run?
- How will shopper preferences and the sharing financial system influence insurance coverage product manufacturing and distribution?
- How will growing environmental disaster threat influence (re)insurance coverage markets and demand?
- How will the scope of enterprise legal responsibility be expanded or contracted?
- To what extent will adoption of superior applied sciences (e.g., AI/ML/VR) disrupt insurance coverage processes?
Given that there’s a lot unknown, are we left to guess about how these will play out sooner or later—or worse, merely wait and see? The reply is not any.
Accenture’s framework for strategic resilience
Whereas predicting the longer term isn’t potential, we will determine triggers that result in market shifts. We will additionally use historic information and business insights to mannequin present developments (utilizing a mannequin we’ve developed for this objective) to stipulate totally different future situations. These situations signify how key developments would possibly result in totally different outcomes beneath totally different circumstances. Based mostly on this info, we will decide which methods could be most acceptable primarily based on concerns comparable to monetary alternative or threat.
We start by outlining present and future developments utilizing the PESTEL framework: political, financial, social, technological, environmental and authorized. From there, we decide the place every development is at present headed—the baseline. The following step is the essential a part of strategic resilience modeling: What occurs if a development adjustments course as a result of an unexpected occasion or shift out there?
That is the place situation planning is available in. We define totally different situations primarily based on potential adjustments to every development. However our strategic resilience framework is greater than only a situation modeling train. We will use real-world information and financials to see the place probably the most alternatives and highest dangers are inside every future situation. Armed with that information, we will decide probably the most acceptable long-term methods for a specific enterprise.
Let’s have a look at a fast instance. Traditionally, small business insurance coverage has been an underserved market with low premium income and excessive assist wants to accumulate and supply mandatory protection. Web sites like Etsy, eBay and Amazon make it simpler than ever to promote merchandise, whereas apps like Uber and DoorDash have established a gig financial system. An entire era of recent enterprise homeowners has been created. These enterprise homeowners and their employees want insurance coverage, however most will nonetheless signify very low premiums on a person foundation.
This group has additionally expressed digitally savvy preferences for buying and servicing. If firms missed these burgeoning new enterprise homeowners and underappreciated the multi-year developments of knowledge proliferation, combining digital capabilities and the consumerization of B2B, then they’re probably simply now realizing that there’s a rising and accessible market (albeit nonetheless in growth).
Insurers are responding as they see digital InsurTechs comparable to NEXT and Vouch construct new enterprise fashions and steal market share. Legacy gamers are getting into or increasing their digital presence within the small enterprise market, comparable to Berkshire’s biBERK and THREE insurance coverage. USAA lately launched a small business mannequin to assist the wants of enterprise homeowners within the veteran neighborhood. New distribution ecosystems are additionally rising by way of the brokerage market to supply small business protection by a digital mannequin, comparable to Aon’s CoverWallet.
As a substitute of reacting, Accenture’s strategic resilience framework might have proven this potential alternative earlier than it was obvious. By outlining a number of potential situations after which analyzing monetary alternative and threat for every, insurers would be capable of have a look at the implications of various potential futures and make a well-informed, data-driven choice.
The particular choice will rely upon a enterprise’s present realities, wants and long-term targets. The purpose is to systemically analyze present developments, build-out versatile situations primarily based on potential adjustments after which make knowledgeable choices which can be particularly designed to construct resilience within the enterprise.
The markets, product strains, channels, worth propositions and know-how you select to put money into—these decisions all affect an organization’s strategic resilience.
Within the subsequent a part of this collection, I’ll slim my focus to a serious class impacting the world: sustainability and ESG (environmental, social and governance). I’ll discover the important thing ESG developments which can be at present impacting the insurance coverage business and undergo particular situation planning for instance the facility of strategic resilience.
Within the meantime, if you’re seeking to construct a long-term strategic roadmap that’s resilient and takes future unknowns under consideration, then please attain out to me right here.
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