While insurance companies conduct a large proportion of their investment management in-house, nearly half (47%) use an external provider to create some or all of their risk analytics, a survey of asset owners by BNP Paribas Securities Services has revealed.
Two thirds (66%) of the 61 insurance companies questioned said risk management is growing in complexity and represents a major challenge for them over the next 12 months, while 56% of insurance companies still see the need for accurate data for decision-making as a major challenge over the coming year.
Having the correct data for regulatory reporting was cited as a major challenge by only 36% of respondents, and the cost of regulatory compliance by only 33%.
Liquidity risk came top of the list of investment risks tracked by insurance companies.
Stress testing was mentioned by 42% of insurance companies as the most important method for monitoring investment risk, followed by liquidity risk analysis (cited by 25% of insurance companies).
As well as the 61 insurers, participants in the survey also included 59 pension funds, 25 official institutions and 32 corporates.
Companies:BNP Paribas Securities Service