By Harry Rosenthal, Unimutual General Manager, Risk Management Services 

You would expect that one of the sectors of the global economy with the best view of risk would be international insurance companies. Unimutual engages many of these internationals as part of our reinsurance panel, and we meet with them to discuss their views of emerging and developing risks, which may impact Australia’s higher education sector.  They possess a classic, “helicopter view”, of risk and loss because the very sustainability of their organisations relies on how well they read the signs and indicators of global risk. Not all of their work is “tea leaf” reading.  Most have extensive panels of scientists, economists and consultants who help them shape their perception of the planet’s risk profile, and develop frameworks from which to view the risks, such as Unimutual, they are underwriting.

This vast resource of expertise and science can be a boom to the individual tertiary sector risk professional interested in strategic risk issues. While we may believe that most of the risks we face are domestic in nature, such as campus property and liability, we also recognise that our institutions seek to play on an every-expanding, international stage. In some cases through bringing the world to their doors via international education or collaboration or through establishing physical foreign campuses, global beachheads, as part of their strategic expansion plans. How can we easily tap this wealth of information and perspectives of the international insurance sector?

It is the policy of Unimutual to share with Members articles and reports we feel may be relevant to the understanding and mitigation of risks faced by the sector. One of the regular studies we distribute is called the PwC Insurance Banana Skins Report. Published every two years, we circulate these reports as distilled insight in to the risk reviews of the global insurance market. The report ranks and rates strategic risks which are disturbing them the most. As a large procurer of reinsurance, on behalf of the Australian university sector, the opinions, beliefs and worries of global insurers are important to us, directly affecting the cost of risk to the Mutual.

There is no precise way to plumb the depths of the collective minds of the sector, but the Banana Skins Report is a significant start. Since 2007, they have been asking the global insurance community, virtually the same questions every two years, and recording the responses. As a risk professional, it is a fascinating way to measure the zeitgeist of the times. At the very least, it is a snapshot of the top ten risks the global insurance sector feels it faces, in achieving their corporate objectives. The risk are re-examined every two years creating a useful list for other large global entities, such as universities.

For example, since the Global Financial Crisis in 2007/08, it is not hard to understand that the insurance sector was waiting for the other regulatory shoe to fall. The banking community had seriously blotted its copybook, eliminating trillions of dollars in value in the wink of an eye. This clear relationship between such global events and regulator response is documented in Banana Skins past reports.  Fears about “regulation” occupied the number 1 spot for most of the following 10 years.  No longer has the traditional risks such as natural catastrophe, occupied top place, as the sector developed a significant focus on capital financial matters as their most pressing strategic risks. Most university executives could sympathise with that, as for the past several years, financial risks have occupied top positions in university strategic risk registers.

The Banana Skins Reports have always served several functions for me. Not only is it an extremely readable, but still technical report, taking the collective pulse of the global insurance market, but over the years it has become an enlightened collection of emerging and increasingly important risks, which I examine for impacts on our own sector. For example, it is pleasing to note that Unimutual recognised the potential impact of cyber & technology risks far earlier than the global insurers did. We’ve  offered protection to Members for cyber-threats for several years, but it only made the Top 3 risks in the current, 2017, Banana Skin report and was never mentioned prior to the 2015 report. Cyber-risk is a very large banana skin!

This report has also been useful to us in marketing Unimutual’s risk to reinsurers. Knowing which risks concern them the most is useful when planning risk management programs, to ensure our underwriting partners view the Mutual as a superior risk.  Finally, when we discus with Members the high level or strategic risks with the sector, it is useful to share what other sectors are worried about, as examples.

While the academic and research risks are unique to the tertiary sector, a large part any univeristy’s operations are engaged in the activity of “running a large business in the current macro-economic environment”. Insurance companies, like universities are also running large businesses, with human, financial and reputational capital. We are all swimming in the same, global waters and it is useful to know and consider the views of fellow travellers.  The Banana Skins reports has given us a valuable view of changes in the perception of risk over the past 10 years, and I look forward to reading future reports.

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