Risk management in times of crisis

COVID-19 resulted in a global crisis. And when you think crisis, you must think risk management. Here Emmanuel Van Grimbergen, Chief Risk Officer of Ageas (CRO), reflects on Ageas’s risk approach over the past year.

Risk management in times of crisis

Thinking the unthinkable

As soon as the crisis hit in Asia and Europe, our Risk department switched into a higher gear. We need to be prepared for all possible scenarios, and we needed to think the unthinkable. We immediately and proactively performed a thorough 360° risk analysis on a weekly basis to ensure we had a view on the capital position of our Group but also the potential impact of COVID-19 on our products. Within two weeks, we were able to put in place a risk assessment process allowing us to monitor the areas of risk most likely to impact our business. This included the economic environment, our capital position, critical assets, product coverage and our response to stress testing. We also monitored the different initiatives in play to support our employees, customers, partners, and society at large. This work continued throughout the year and continues today.

Diversification is crucial to managing risk

The resilience of our Group was helped by an already strong Solvency ratio and capital position. Despite the continuing downward trend in interest rates, a decrease in the stock market, and the increase in spreads, our liquidity/cash position remained strong. We also benefitted from a well-diversified product portfolio and geographic spread across Europe and Asia, both of which are core to our Connect21 strategy. With a focus mainly on retail and small-medium sized enterprises, most of our products were not exposed to the typical types of risks the pandemic brought with it, such as business interruptions, so claims were quite limited. Equally, our Non-Life activities compensated for the lower performance of Life. Moreover, the pandemic impacted Europe and Asia differently and on somewhat different time scales, allowing our business performance to stay in balance. 

Daring to improve

2020 was the year we definitely lived up to our value Dare, but always within the context of manageable risk. We chose to continue to make a dividend payment, keeping our promise to shareholders, many of whom are reliant on the payment of a dividend. This was only possible because of our resilient business model and strong capital position.

The events also helped change our view on risks in certain domains. For instance, ideas around the Future of Work were often considered as disruptive for the business, but still viewed as emerging. But based on our experience over the past year, we are now better able to assess and quantify the risk. This will help us as we continue to evolve towards a new way of working at Ageas. 

The past year has shown more than ever the important role of Risk management within the Group. It is all about defining your playing field within the boundaries of the evident and potential risks, allowing us to take informed decisions in order to be prepared for ‘the day after tomorrow’.