Talking about risk is easy; the challenge is in monetizing the risk. How do you value the money spent on insurance and what is your decision-making framework?
In the following WTW with the corporate treasurer of Nexperia will present an innovative approach in which we have jointly taken up this challenge. The key considerations are:
• How can you quantify risk and choose the most cost-efficient solution for your risk-return spectrum?
• Which data do you use and what is the basis for a decision-making framework?
• How can tools and dashboards be used to track performance and show best value for money?
• How to disclose and project the cost for climate risks?
The answers to these questions will be provided from a data-driven approach and insight-led customer experience. In our presentation we will highlight the following three themes:
• Asset & Liabilities – We mapped out different scenarios with the client about the assets and liabilities and analysed how a loss or claim would affect the company’s financial strength.
• Portfolio analysis – Risks in different silos mostly occur independently and are often seen as uncorrelated risks. The portfolio analysis provides insights in correlation between risks and is used to determine the efficient frontier as a decision-making framework.
• Climate Change – Climate change and the response to it will have financially material impact on the cashflows available. Scenario analysis, as a risk management tool, allowed the client to identify and manage the specific risks of climate change and thus understand the potential impact.
The potential impacts of climate change that need to be captured have been split into two categories:
o Physical Risk
o Transition Risk
Speakers: Sahan Mukherjee, VP Group Treasurer- Nexperia & David Stebbing, Risk & Analytics/Climate Change Risk Consultant – WTW