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Perspectives
Extended enterprise risk management for insurance companies
COVID-19’s impact on the third-party service provider landscape
As COVID-19 continues to affect business operations, what extended enterprise risks are emerging in the insurance industry? Explore steps to help insurance companies manage expanding third-party risks, enhance performance, and reduce costs.
Explore content
- Responding to COVID-19
- Prioritizing high-risk areas
- Impact on third-party service providers
- Get ready checklist
- Innovative technologies
Responding to COVID-19 today to build an improved extended enterprise
The COVID-19 pandemic has had an unprecedented impact on organizations. Business operations in the insurance sector have needed to adapt to changes in the workforce, use new tools and technologies, and find new ways of interacting with their extended enterprise. Insurance organizations are dependent on a variety of critical service providers to operate successfully. And while the need for understanding and managing the risks of outsourcing critical services isn’t new, operating in the COVID-19 environment has amplified these risks, presenting new challenges in achieving resiliency.
More specifically, COVID-19 has heightened existing or, in some cases, introduced new emerging risks in the insurance industry across domains (such as business continuity and resiliency, financial health, and cybersecurity), which can lead to increased exposures within the extended enterprise. For instance, many firms have rapidly adapted their operations and business continuity plans to cope with a new way of working and, in certain situations, an overwhelming volume of issues.
This evolution in the third-party ecosystem requires a refreshed approach to enterprise risk management for insurance companies, including oversight techniques to effectively and efficiently 1) manage risk, 2) enhance performance, and 3) reduce costs.
Insurers face array of emerging third-party risks
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Prioritizing types of risk in the insurance industry
Organizations should focus on evolving risks within the extended enterprise (such as third-party service provider risks) that have been amplified as a result of the COVID-19 pandemic and the dynamic fluidity of the current environment.
- Resiliency – Depleted and disconnected resources adjusting to a more distributed working environment, potentially leading to greater difficulty in maintaining operational resiliency and opportunities for control compromises and undetected fraud
- Financial health – Market volatility, difficulty collecting payments, and cash flow challenges may affect operational stability
- Technology – Hastily implemented technologies and increased use of new or unmanaged tools may lack sufficient performance capabilities and security controls to protect data
- Regulatory – Shifts in operating models to address the changing environment may affect the ability to meet service obligations and related regulatory compliance requirements
- Fourth-party or subcontractor – Service providers’ increased dependency on their own third parties elevates vulnerability due to lack of transparency
In order to identify the most important risks to the organization, start by understanding the top issues associated with each of your critical third-party service providers. Then, utilize a detailed action plan targeted at addressing these specific challenges in your extended enterprise in order to move from responding to recovering, to ultimately thriving in this disruptive environment.
Impact on third-party service providers
Prior to taking any immediate actions, it is imperative to understand how COVID-19 has affected your most critical third-party service providers and, ultimately, how their business operations could—in turn—affect your business.
Get ready: A checklist to start taking action and address COVID-19 immediately
Begin to thrive: Innovative techniques designed to help identify and manage risk in the insurance industry
Get in touch
For more information, please contact:
| Jordan Kuperschmid Principal Deloitte Risk & Financial Advisory Deloitte & Touche LLP +1 973 602 5040 |
Jonathan Rizzo Principal Deloitte Risk & Financial Advisory Deloitte & Touche LLP +1 212 436 3709 |
Kevin Gallagher Managing Director Deloitte Risk & Financial Advisory Deloitte & Touche LLP +1 212 436 6072 |
Suzanne Denton Managing Director Deloitte Risk & Financial Advisory Deloitte & Touche LLP +1 212 436 7601 |
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