Expert Identifies Effects Of Globalization As Threat To Business GrowthBusiness, Featured, Latest News Wednesday, July 27th, 2016
BALTIMORE, MD (AFRICAN EXAMINER) – Although they are known with immense benefits, still, the effects of globalization, digitalization and technological disruption have been confirmed to pose serious challenges to businesses operating on the continent.
The Chief Regions and Markets Officer of Allianz Global Corporate and Specialty (AGCS), Andreas Berger made the confirmation Tuesday in Sun City, South Africa, while addressing the Risk managers; Insurance professionals; Brokers and Business leaders at the annual Insurance Conference in Sun City, South Africa.
The effects of the trending technological and environmental situations globally, Berger asserted would make businesses to “face a wider range of disruptive forces in 2016 and beyond”.
“The effects of globalization, digitalization and technological disruption pose fundamental challenges to many businesses.
“The emergence of industry 4.0 could result in higher risk of large-scale losses Corporates operating in Africa have a particular role in embracing and responding to new technologies” the Insurance multinational warned in a release signed by its Head, Public Relations and Communications, Lesiba.Sethoga.
Berger reiterated “the effects of globalization, digitalization and technological disruption pose fundamental challenges to many industries,” adding “the emergence of Internet of Things (IoT), smart factories, data analytics, artificial intelligence to name but a few could result in higher risk of large-scale losses due to increasing interconnectivity.”
The member of the Insurance empire management board specified that businesses based in Africa have a particular role in embracing and responding to new technologies compared to mature markets as there is an urgent and important need to grow their enterprises and economies rapidly.
“They need to move with speed through the 3rd industrial revolution into the digital era, but need adequate policies and infrastructure to manage this transformation,” he says.
Similarly, he added “Businesses operating in the retail insurance sector have been particularly good at using mobile, digital and social media technology to provide simple and convenient products and sales channels and this is gradually increasing in the business to business arena as well”.
Berger however predicted that future risk assessments in Africa by risk engineers would occur through new channels such as mobile insurance drones rather than on-site visits thus presenting the key to the future of business insurance through developing digital capabilities that address superior customer experience.
On risk transfer solutions, Berger warned that businesses that connected industries required “new insurance solutions that will cater for emerging risks.
He also proffered “while frequency losses are expected to decrease due to predictive maintenance”, there is a higher risk of large-scale losses due to increasing interconnectivity as well as the new liability scenarios evolving as human error is being replaced by technical failure resulting in increasing importance of product liability.
The regional head added that cyber vulnerability is another risk which companies are very concerned about, while attacks by hackers were becoming more target-oriented, lasting for longer and could trigger a continuous penetration. “Cyber activity is at the top of long-term risks in Africa and around the globe” he noted.
“Digital interconnectedness risks such as business interruption through non-malicious activity, physical damage following a non-malicous IT error, loss of intellectual property, and failure of utility services are risks that companies would like to insure against, but there is currently only limited insurance solution available in the market. “Insurers need to work with clients to consider the changing loss pattern and new emerging risks,” explains Berger. “There must be a review of insurance solutions and risk mitigation practices to reflect these new risk management realities. Refining existing and developing new risk services will be necessary by businesses and insurers” Berger restated.
As a way out of the emerging challenges, Berger urged the insurance industry to consider the broader use of digital technology to improve customer experience and to create new risk transfer solutions for the digital economy.
He also advised that Insurance companies need to acclimatize to new business models and conduct advanced risk assessments through data analytics for new customer services.
The internal transformation for insurance companies Berger told the underwriters signified that processes should be digitalized to increase quality and productivity as well as require a “highly permeable non-silo structure that allows flow for skills and ideas”.
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