The methodological framework
The methodological approach
The philosophy underlying the Reputational & Emerging Risk Observatory is a risk management philosophy with a holistic approach to risks and opportunities.
The keystone of the Observatory is so-called “Internal-External Alignment”. The internal perspective is integrated with and external perspective in order to ensure constant alignment between stakeholder expectations and the Group’s responses today (Reputational risk) and tomorrow (Emerging risk).
The focus of the analysis is the Materiality used to filter topics: over time the Group response is aligned with stakeholder expectations regarding currently material issues and expected material issues in the next 5 years.
In order to identify the issues of the future in advance the Observatory uses the predictive Meeting Point model, which, through the structured listening to different categories of sources and the use of algorithms consolidated and tested over time, is able to generate quantitative and qualitative trends relating to the so-called Tree60, i.e. a tree consisting of 360 topics to offer a 360-degree overview of the insurance sector and surrounding external environment.
A structured process was defined for the management of emerging risks intended to identify the most material emerging trends and their related risks and opportunities, assess the extent of the Group’s strategic control, define mitigation plans and carry out constant monitoring and updating.
The Observatory serves as an outer frame for the reputational risk management framework and a reference for the creation of the Materiality Matrix, making it possible to contemplate the same in a broader context and anticipate social, cultural, technological, environmental, political and regulatory changes destined to influence stakeholder expectations.
The four key pillars
The Reputational & Emerging Risk Observatory is founded on four key pillars:
- Establishment of a Technical Board
Created within a specific structure that in the context of Risk Management oversees reputational and emerging risks so as to be integrated in the Group Enterprise Risk Management (ERM) system, the Observatory makes use of a specific Technical Board, formed by the corporate functions that play a supporting role in the management of such risks. The establishment of the Technical Board aims to overcome organisation barriers and ensure multidisciplinarity and the integrated and synergetic approach of the various corporate functions.
- Involvement of Business Managers
The Observatory envisages the systematic involvement of Business Managers in line with the objective of creating a strategic tool to support Group development
- Use of a predictive model
The Observatory makes use of a consolidated predictive model based on the Meeting Point methodology, in collaboration with Ms Egeria Di Nallo, former Head of Sociology at the University of Bologna. The adoption of a predictive model that relies on the telescope and not the rear-view mirror is essential for the adoption ad a forward-looking approach, aimed at anticipating future risks and opportunities. To obtain an even longer-term view, the Observatory also uses methods based on futures studies for the purpose of constructing future scenarios in the long term.
- Integration of the stakeholder perspective
In the context of the Observatory, the risk management system integrates the stakeholder perspective, enriching the internal vision of Management with the external vision of the reference stakeholders.