Crisis simulation for insurers

Scenario planning for insurers is designed to create a blueprint for preparedness should something unexpected happen.

It aims to 'be wise before the event', not after it. This means enabling insurers like yourself to think ahead intelligently, considering what events may occur and what their impacts might be.

Crisis simulation exercises are a key component of preparedness and are essential for assessing insurer's response teams and strategies. You can use crisis simulations to test your organisation's responses to both operational and financial crises.

How we work with insurers

We work with your teams to design and facilitate sessions that are relevant to your organisation and the objectives you need to test.

Following the exercise, we provide a report outlining observations and prioritised recommendations so that you can focus resources on improving resilience and share the findings internally with board and risk committees, as well as with regulators and clients as needed.

Our exercises are tailored to suit the maturity and experience of your insurance team and range — from desktop exercises to media enhanced, realistic crisis simulations.

Testing operational resilience for insurers

Meeting new regulatory requirements

Regulators’ new operational resilience requirements ask insurers (and banks) to identify important business services (IBS) and set impact tolerances. They also ask firms to document their approach to scenario testing, including risks to the ability to remain with the impact tolerances. The rules come into effect from March 2022.

Assessing your resilience

An effective way to meet this objective and assess your important business services (IBS) operational resilience is to perform a simulation or exercise. This helps you provide assurances to your organisation, clients, regulators and other relevant stakeholders regarding your ability to withstand disruption and crisis.

We will support you so that the scenarios are appropriate, challenging and meet your specific objectives. We will also provide you with the written evidence as required by the regulators, in the form of a report on the exercise.

Testing financial resilience for insurers

Bringing stress and scenario testing to life

The strength of the balance sheet and the liquidity position is well tested, via stress and scenario testing, However, a crisis does not happen in isolation so it’s essential to assess how your organisation responds in practice.

That means taking the appropriate steps to improve the financials and considering the wider response strategy. This is something that is especially challenging, given the short, medium and longer term risks as well as the considerations required during a crisis.

Assessing the robustness of your plans

We work with you to develop scenarios that test whether your recovery plans integrate with wider organisational crisis management strategies. And we’ll also ensure alignment with your risk appetite statements. These scenarios take into account the specific timelines of incidents, as well as governance and communication requirements.

The exercise outcome provides board and risk committees with actions to provide reassurances that recovery planning is embedded into the risk and business continuity framework and that preparedness is proportionate.

Benefits of our approach

Providing assurances to your firm, policy holders, regulators and other stakeholders in relation to your ability to withstand disruption and crisis
Challenging, validating and strengthening response and communications plans, teams and strategies
Identifying and understanding risks in relation to your plans
Understanding how specific plans fit into the wider organisational response framework