Failure to Innovate is the Greatest Risk of all, According to Willis's Resilience Magazine
London, UK, April 28, 2014 - The goal to minimise risk opens up one of the riskiest paths in management: a failure to innovate. This is according to Gerard Tellis, director of the Center for Global Innovation and Neely Chair of American Enterprise at the University of Southern California, writing in the fourth edition of Resilience, the risk management publication from Willis Group Holdings plc (NYSE: WSH), the global risk adviser, insurance and reinsurance broker.
Firms often fail when they are at the peak of success, noted Tellis. "Success leads to complacency, arrogance and lack of change. Market leaders often think that the future is secure and assume a false sense of security and assurance against risk." He calls this phenomenon the 'incumbent's curse'.
Market leading firms often shun risky innovations because of their high failure rate, while entrepreneurs embrace them because they have little to lose, explained Tellis. A focus on the future will enhance a firm's ability to embrace risk, he continued, and the best system to help individuals embrace risk is "asymmetric incentives" for enterprise. Such a system provides strong rewards for successful innovation but weak penalties for failure.
Other risk management and insurance insights in the latest issue of Resilience include:
1. An exchange of big ideas. With private healthcare exchanges cropping up all over the U.S., interest is high among employers looking to curtail costs, transfer risk and give employees more control and flexibility. The private exchange model will prove particularly appealing for employers with high concentrations of seasonal workforces and those in the retail and hospitality sectors, according to James Blaney, CEO of Willis's Human Capital practice.
2. Big data = big risks? Companies need to ask tough questions about what data they collect, as governments around the world develop legislation designed to protect consumers' rights and privacy. The global legislative picture is complex and inconsistent, increasing the risk profile dramatically for those with a multinational footprint. "There is a growing sense around the world that something must be done, following recent scandals and growing media scrutiny of companies' data management," warned Karl Pedersen, Senior Vice-President for Willis's Cyber and Errors & Omissions (E&O) team.
3. Captives in Asia are taking off. "As Asian companies expand, acquire more assets overseas and become increasingly sophisticated, they are looking for alternative ways to manage their risks," according to Paul Owens, CEO of Willis's Global Captive Management practice. "We therefore anticipate Asia's share of worldwide captives to grow over the next five to ten years."
4. Brazil's moment. As the eyes of the world turn to Brazil in anticipation of this year's World Cup, more fundamental questions are being asked about its economic, political and social future. But despite recent economic slowdown and street protests, the long-term future remains bright. "Brazil's strong domestic market, fast-growing middle class, natural resources, strong industrial sector and need for long-term infrastructure investment mean that the country continues to present an opportunity," says Jose Otavio, Chief Executive of Willis Brazil.
About Willis
Willis Group Holdings plc is a leading global risk adviser, insurance and reinsurance broker. With roots dating to 1828, Willis operates today on every continent with more than 18,000 employees in over 400 offices. Willis offers its clients superior expertise, teamwork, innovation and market-leading products and professional services in risk management and transfer. Our experts rank among the world's leading authorities on analytics, modelling and mitigation strategies at the intersection of global commerce and extreme events. Find more information at our website, www.willis.com, our leadership journal, Resilience, or our up-to-the-minute blog on breaking news, WillisWire. Across geographies, industries and specialisms, Willis provides its local and multinational clients with resilience for a risky world.
Willis Towers Watson Public Limited Company is a world leader in consulting, insurance brokerage and risk management software development. Revenues break down by activity as follows:
- human capital and social benefits consulting services (35.6%): consulting services in the organization, skills assessment, management and optimization of social benefits, compensation of executives and employees, etc. ;
- development of enterprise risk management solutions and services (31.9%): risk analysis, assessment consulting, effective risk management and anticipation services, design and development of software solutions for risk management. The group is also developing an insurance brokerage activity;
- risk/return balance management consulting services (17.7%): for investors, insurers and reinsurers. Additionally, the group offers insurance and reinsurance consulting services, financial management services, financing and investment strategies, as well as actuarial studies and expertise in mergers and acquisitions, etc., while developing software solutions for modeling and analysis of risks and financial activities;
- management and operation of a platform for the exchange and outsourcing of group health insurance plans and medical benefits (14.7%): allowing employees and retirees to choose the health coverage that meets their needs;
- other (0.1%).
Revenue is distributed geographically as follows: Ireland (1.7%), the United States (49.7%), the United Kingdom (20.5%) and other (28.1%).
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