Marsh risk consulting by East Coast Promotions

COMPANY PROFILE

2015

Marsh Risk Consulting

+27 (0)11 060 7100 | africa.marsh.com

company profile

Trusted partner for risk solutions Editorial: Ajuanne Payne

With the largest dedicated team of professionals in the African continent and recognised as the partner of choice for market leaders in a range of industry sectors in South Africa – Marsh Risk Consulting is arguably the number one provider of risk assessment services in the Southern African region. Speaking with Volker von Widdern, Managing Director of Marsh Risk Consulting, South Africa, IndustrySA catches up on developments in the company over the past year. Risk assessment forms the backbone of the global insurance industry – accurately quantifying potential pitfalls for companies is key to not only getting insured, but getting the best, most cost effective insurance. Cost effectiveness is no longer based on the premium, but on wider definitions of the Total Cost of Risk. You cannot insure your assets without some element of risk assessment and as such, this area of the business is at the core of predicting any financial hurdles a company may have to overcome. In our current times, customers have access to a wealth of information at their fingertips and are much more empowered when making spending decisions than previously. Essentially the definition of insurance hasn’t changed – you pay for an insurance policy that pays out if the organization suffers an insured loss; however the science behind risk mitigation has developed tenfold from the days when customers would set up a meeting with a broker prior to making an insurance purchase. In this globally connected, internet age, the science of risk assessment has evolved to fully utilise new opportunities – be it the benefits of new technology to analyse data, or the connectivity of the global economy making it easier to quantify potential risks.

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Risk to a certain extent is, evidently, necessary and unavoidable in any company, be it mid-sized or large corporate, in order to promote growth and invest in progress. All risks are both a challenge and an opportunity – and it is Marsh Risk Consulting’s job to effectively assess the potential challenges in order to enable organizations to exploit the opportunities. The South African insurance market accounts for nearly 80% of the African market as a whole and is playing a key role in the fast rate of socio-economic growth on the continent, with South Africa acting as a springboard for investments in the rest of the continent. The country does hold a leading position in terms of risk financing and loss control programmes in the global risk management community – innovations and developments that definitely have their roots in the complexities of the market there. As the hub of the African insurance market, South Africa is home to regional divisions of global leaders in the insurance and risk advisory industries. The most recognisable of these companies, and a household name, is Marsh – a leader in insurance broking and risk management worldwide, with local subsidiary, Marsh Africa heading up the company’s interests on the continent. This subsidiary is part of Marsh and

Marsh Risk Consulting

McLennan Companies – a group with almost 150 years of experience in the industry. Defined by a deep corporate culture of specialization and collaboration, Marsh Africa is born of a company with a proven track record for excellence in handling all the ‘what ifs’ an organisation may come across. Headquartered in Johannesburg, Marsh Africa has branches in Namibia, Botswana, Zambia, Malawi, Zimbabwe, Uganda and Nigeria, as well as affiliates in over 20 African countries. The specialised division for Marsh Africa that handles its risk consultancy is Marsh Risk Consulting (MRC) which was part of a merger with Alexander Forbes Risk Services back in 2012 to create the largest risk consultancy on the African continent. Expansion across Africa is an ongoing strategy for the company. Volker Von Widdern, Managing Director of MRC SA, explains: “Marsh is in the progress of finalising its footprint in Nigeria, which will position it as number one there. It continues to develop its footprint in North East Africa and in selected African countries, so that gives us a very strong footprint across Africa. Then we have a network of 20 plus associates and correspondents - so we are represented in over 30 countries around Africa. “This is part of the ongoing strategy since Marsh’s

acquisition of Alexander Forbes - to ensure that we are represented in many African countries throughout the continent.” In a region often seen as the last development frontier, with a higher likelihood of political, social and economic change, the risk landscape is difficult to manage at best and unpredictable at worst in the fast-growing economies that make up the African continent. Pre-emptively, MRC, encompassed by Marsh Africa is taking the steps today that will ensure it is in the best position to serve large corporate clients in areas which have not, up until now, had an insurance sector as developed as South Africa and the rest of the globe. It is what the company does best – anticipating events to ensure preparedness, and with Marsh on side in the years to come, the entities currently investing in Africa will ensure they have the capacity to get the job done.

BACK TO BASICS In order to help organizations to better identify and manage the potential risks they face, the core of MRC’s risk consultation can be broken down into two main themes – qualitative or operational risk on the one hand and quantitative or financial risk on the other. Volker von Widdern explains in further detail: “The

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company profile

kinds of things that can burn, break, injure people, poison the environment etc. - those are addressed under hazard/operational risks.” The company would write up a substantial report, encompassing all their findings and assessing the critical elements and main risk areas. Using this to correctly evaluate and price the risk, underwriters are able to ensure they propose the right solutions to their clients. “The critical outputs of the survey report are what we call the estimated maximum loss (EML) and the maximum possible loss (MPL) scenarios,” says von Widdern. “EML is a large loss scenario but where protective systems work - so the fire prevention works, or you can minimise the impact of plant failure. The MPL is where your prevention systems don’t work - maybe a plane hits your roof and wipes out your sprinkler system, for example.” Once MRC has this comprehensive report and it is made available to its insurance market brokers, it can raise recommendations for the clients on how best to assist them to improve the risk. MRC draws on its expertise and the knowledge gained through a close working partnership with its client to provide effective risk management solutions. “We work right from the bottom up to help with developing standards, training and implementation. We

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have a very strong audit programme, do benchmarking and validations and effectively become the rent-arisk manager providing the right resource as required across the whole qualitative operational risk area,” von Widdern explains.

PEOPLE POWER MRC in South Africa provides its clients with strategic advice and innovative solutions across a wide range of insurable and uninsurable risks in order to improve resiliency. The company offers services to its largescale clients in the mining and financial services sectors, clients in the middle market sector, ranging from manufacturers, automotive companies, hospitality and catering, distribution, food, retail – the list goes on. In this age of increasing technological advancements, MRC has long recognised the importance of maintaining face-to-face connections in order to truly understand the needs of a client on a case-by-case basis. Part of the reason for MRC’s large dedicated team in SA is the signficant benefits of having multiskilled staff members with expertise in the different fields the company works in. “We need technical engineering people to understand how mechanical things work and understand when they break down how long they will

Marsh Risk Consulting

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company profile

TRANSITION RISK SOLUTIONS PTY LTD

(Underwriting Managers)

FSP No : 40534

Transition Risk Solutions was founded in 2009 by experienced short term insurance campaigners Winston van Zyl and Tony Rose. Winston and Tony combined have spent more than 50 years in the reinsurance, insurance, retail broking industry, holding senior positions at the various corporation’s that they have worked for. Transition has secured panel positions at many of its targeted accounts. Growth followed strong relationships with major national, international and independent brokers of which Marsh is one of their leading suppliers. At the outset Transition adopted a strategy of writing follow lines on the larger Assets All Risks type policies depending on risk segmentation and quality Transition specialises in corporate assets risks for large corporate client’s i.e. Telkom, Eskom, Impala etc with operations in South Africa and beyond. Our segments include Mining, Industrial ,Energy , Manufacturing and all other property portfolios says Winston. The UMA offers covers such as Material Damage, Business Interruption and Machinery Breakdown as well as all assets associated with their clients activities. Transition’s partnership with New National (South Africa’s oldest empowered insurer) has been in existence for the past three years. New National has just exceeded the R1billion mark in premium income and boasts impressive empowerment credentials. Due to New National being involved in other classes of business (motor, liability, engineering, marine etc.), Transition is able to offer a seamless product to its clients. The partnership is also a welcome step towards transformation in an industry where change happens slowly. “We share the common vision of meaningful transformation in the corporate insurance space” says Rose. New National | One of South Africa’s Largest Empowered Short Term Insurers | A rated - GCR | FSP 2603 Address: 11 Boundary Road, Isle of Houghton, 1st Floor, No 2 Harrow Court, Parktown, Johannesburg Directors: Winston van Zyl (cell no: 0823383960) and Tony Rose (cell no: 0834538673) Ownership: Transition is owned by Winston van Zyl and Tony Rose Tel: (011) 4846802 | Fax: (011) 4849385 | E-Mail: Winston@transitionrisk.co.za and tony@transitionrisk.co.za

be down for,” explains von Widdern. “Then we need people on the fire, health and safety standard side. We recruit people and develop them. Our development comes from the survey routines we have established over many years; the audit procedures, the technical standards and benchmarking, and people learn these and learn what best practice is. “We have chartered accountants working for us. They are offering the highest level of insurance consulting to the captive insurance companies that we service here. These are people who may have been junior accountants through the chartered accountant training routes at auditing firms and who have looked for jobs in commerce. We try and recruit them and demonstrate that there are good opportunities for career growth as both accountants and consultants, in an area of specialisation like insurance. “The same happens with asset valuations. We would recruit an asset valuer and they would like working in a large organisation where the client base is highly diverse and they can gain diverse experience,” von Widdern explains. “We want to be the leading risk advisor, reducing the cost of risk both qualitatively and quantitatively in

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respect of cash flow and exposure. What that means is that by engaging with clients we want it to be recognised that we add value by reducing risks and that improves business performance. “We think that by demonstrating to companies that you can use risk management as a strong lever towards operational improvement, it will become less of a grudge purchase and more of a gain sharing, success building process,” says von Widdern. MRC has experienced growth across the whole business over the past year, in both revenues and physical size. When we spoke with von Widdern in 2014, his team numbered around 110 people, but has since grown to 140 associates spanning financial risk, fraud, forensics, modelling, risk finance optimisation and all occupational risk areas. “As far as Marsh Risk Consulting is concerned we had a very good organic growth year in 2014 - well above inflation, well above 10%. The team also grew by more than inflation and our role in terms of both financial risk modelling and operational risk continues to grow,” von Widdern explains. “Overall there are very much higher levels of competence in all of the practices that we have at the

Marsh Risk Consulting business.” The insurance and risk management sector is not one typically known for a large headcount; however Marsh understands the importance of being able to boast an industry leading team with unrivalled expertise spanning all the industries it services. The company is continuously adapting to stay abreast and be prepared for all the issues surrounding accurate and comprehensive risk consulting in the region – and one very important part of this is having the right people for the job.

CHANGES IN THE INDUSTRY

brings with it. “The industry I think is going to continue this path of being more and more holistic, where you’ve got to bring together different entities,” von Widdern explains. “The starting point is very much compliance and regulatory orientated, in an operational sense as well as from a statutory risk product point of view. “You have to ask, what are the organisation’s goals and how do we make sure that we have the highest relationship in the risk management space? Do we understand the full consequences of potential exposures? How do we protect the organisations early or innovate and make the organisation’s systems even better? That element of linking all the dots, I think, continues to grow.” One element of ‘linking all the dots’, and an aspect of MRC’s offering that we looked at in our previous feature in 2014, is supply chain risk. The company is unique in this offering; a further example of its ability to think of everything and anticipate the needs of its clients.

Interconnectedness is one of the prevailing factors changing the global insurance and risk market – as seen in the financial crisis in 2008 and the cascading socioeconomic consequences that were felt worldwide. Along with this increasing interconnectedness globally, a greater understanding for the connections between risk factors is developing. A positive change as a result of this is the increasing 2788 Constantia_Uma Directory advert_9-4-2015.pdf SUPPLY 1 2015/04/14 AM CHAIN10:13 RISK need for collaboration and mutually beneficial Von Widdern explains that as the only company to partnerships in order to better understand this new age of offer supply chain assessment in the region, they are communication and the changes to the risk landscape it

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company profile ahead of the competition in this area. “In the field of supply chain risk assessment, there is difficulty in achieving adequate insurance coverage and our unique analysis substantially improves the coverage terms for our clients. “We are the only risk consultants in South Africa’s insurance industry who do supply chain risk assessment. It’s unlikely that you can get a risk solution from anyone else other than Marsh where we will motivate a more pragmatic risk orientated outcome, in partnership with the insurers,” he says. MRC provides comprehensive solutions to cover all aspects of assessing, understanding and managing the potential risks to supply chain that can be farreaching. Von Widdern defines this type of risk as: “any disruption to the supply chain where the underlying assets or business interruption cover for the company’s own assets is not the primary risk exposure consideration.” “Instead of just accepting that supply chain is not insured, more and more effort is going into mapping and understanding elements of the supply chain that are priority items to the corporate and finding ways of

partially insuring or better insuring the supply chain. “When you can’t insure it, it’s very important to understand the knock-on effect of the underperformance or the absences of your supply chain performance and understand how your resilience or your recovery plans can work there. So, that level of integration is moving ahead, but I would say it’s still early stages,” explains von Widdern.

CHANGES IN THE MARKET An ongoing and continually developing factor in the risk management sector is the continued advancements in technology that are contributing to the more interconnected world economy in a wider sense and, specifically in risk management, enabling companies to get a clearer, more detailed grasp on what factors will potentially effect day-to-day business. Underpinning the practice of risk assessment is data – the ability to accurately collect it and analyse it. “I think the main emphasis moving forward is going to be streamlining the collection of data applicable to the insured risk; the asset basis of clients, and/or insured environments,” von Widdern explains.

Hollard & Marsh partner to deliver effective and individualised commercial and corporate insurance in Africa “Hollard Insurance is proud to partner with Marsh, South Africa’s largest broker, whose priority is to deliver innovative insurance protection which accurately fills the specific needs of their clients – both in South Africa and the African continent. Our shared vision includes fast and efficient claims settlement, innovative risk management, minimisation of client stress, coupled with expert knowledge of risk and legal requirements in our mutual client’s country of operation which can differ significantly and impact on the effectiveness of insurance protection.” says Andre van der Merwe, head of Corporate Property at Hollard Broker Markets, a division of Hollard Insurance, one of South Africa’s top three insurers who are specialists in all forms of commercial and personal lines insurance. Hollard Insurance is an innovator and trend setter in South Africa’s insurance industry with a turnover exceeding R12.5 billion and assets in excess of R23.6 billion. Since 1980 Hollard has been forming solid win-win partnerships which benefit clients and has introduced many firsts in its leadership role in all forms of insurance as well as creative approach to risk management. Van der Merwe elaborates “The financial threats that businesses face in this century come from many directions such as: advances in cyber technology, political instability, internal and external fraud and changing weather patterns. Marsh’s demands for their clients is high and Hollard’s specialist teams in all categories of insurance are equipped to deliver exceptional and individualised insurance throughout Africa. “Sharing priorities, vision and high levels of expertise is essential in any partnership in order to deliver accurate levels of commercial and corporate insurance.” Here are the main priorities Hollard shares with Marsh: • • • • • •

We have specialist teams who work together to individualise protection We are continually innovating products and services to meet changing client needs We deliver accurate insurance and risk management backup Legitimate claims are settled quickly and efficiently to minimise client stress Hollard has the highest possible financial capacity for paying claims Marsh teams are approachable and experienced and work in synch with our different Centres of Excellence which offer all categories of commercial insurance • Hollard has offices and local partnerships throughout Africa to serve Marsh clients

More information about Hollard’s culture, commitment and products is available on www.hollardbrokers.co.za.

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Marsh Risk Consulting

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company profile “That will become more and more technology driven and seen to be generic. The focus will be more on the interpretation of that data and making sure that the appropriate risk management and/or cover is applied to the data when it’s interpreted. “For example, with a client in 100 or so locations, it’s very important to have an accurate understanding of that, and then the issue is, ‘what is the next step?’ “In history, a simple addition of all the values of those locations would have been done to get your number, but perhaps these days it won’t be a simple addition, it will be some other approach. The interpretation of the data once it has been collected will be the real direction going forward.” Marsh has been busy applying advancements in technology and process to all areas of its business – and one area they are doing this in is in the local mining industry. The mining sector has always been one of the cornerstones of the South African economy; according to the Chamber of Mines in South Africa, in 2013 the sector accounted for 8.3% GDP, equivalent to R279.7 billion. Globally, Marsh is the world’s leading provider of

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risk management and insurance services to the mining industry and MRC in South Africa is no different. With 17% of the global mining budget being spent in Africa, the company provide their clients with a service that takes into account local expertise, while also having the added benefit of being able to access all major global markets also. MRC has spent its time over the past year further cementing its hold in the South African mining industry. “We’ve moved quite strongly into the mining sector. We’ve always been a strong participant there, but we’ve developed new ways of calibrating and assessing risks across many mining portfolios - so that’s been a very good milestone that we’re about to launch in the Q3 of this year.” Another area in which MRC has a lot of influence is within the developing renewable energy sector in South Africa. The renewables sector globally has seen a huge leap in investments and opportunities in the past five years and when it comes to seeing this trend reflected locally, South Africa as a nation has considerable, unrealised potential in the areas of wind and solar energy.

Marsh Risk Consulting

Managing Director | Volker von Widdern Infiniti Print Ad 88 x 125.pdf As a result of aligning its renewable energy policy with its broader climate and development policies in 2009, South Africa has helped secure the confidence of investors in the years since and has targeted renewable energy production to make up 9% of total electricity generated by 2030. “Marsh has over 50% market share in the renewable energy space in South Africa,” von Widdern explains. “So, we are the risk provider to more than half of the new alternative energy providers to our state utility, which is a strong position to be in and we understand that space quite well. “As you move forward in that innovation from the risk finance point of view, many of these new independent power producers and/or sectors need to have a form of alternative capital or strategic risk finance product service, because there are times when difficult to insure events happen. “Whatever the issue is, it could be a long period of absence of sunshine or wind, more thinking is going in to protecting those businesses. That’s a sector that’s going to continue to grow and where we are well represented,” he says.

16/04/2015

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CMY

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company profile and capabilities; von Widdern explains that it is the quality of the staff at the company that underpins its continued success. “It really is down to the high variety of well experienced and skilled staff in four or five areas of risk management that are not available in any other provider in the local market. Our teams in those areas are three, four, five times any similar team in the market,” says von Widdern. After moving into modern office facilities in October, 2013, to bring together the teams following the merger with Alexander Forbes in 2012, MRC has seen strong and continued growth. “We have certain competencies, but we haven’t locked up the market. There are other service providers for every one of the services we offer. We are under constant pressure to justify a premium price. Market entrants are constantly coming in so we have to try and be nimble as well as being corporately well aligned. “There is a lot of competition but it keeps us alert and that is fine.” Aside from von Widdern’s confidence in his team, it is his own influence on the company, in industry

experience and leadership that has also contributed significantly to its number one spot in the South Africa risk consulting arena. “I’ve been in financial services, in one form or another - either asset management or insurance and risk, for most of my career,” von Widdern explains. “When I arrived at Marsh, I had the option of becoming a senior financial executive or working in more of a consulting type role. Marsh in South Africa was fairly small at the time but had some very large corporate accounts like Anglo American,” he says. “We wanted to focus on very large clients in a way that we could add value, make sure that we understood the full range of strategic risks and bring a new level of thinking. “I came at it from a financial strategic element. I was also appointed to the board of Marsh and through that process understood that we had access to risk consulting engineers and a variety of other specialist risk areas. As a result of my interest in that area, the division was handed over to me in late 2002, and from early 2003, I started travelling around the world, seeing how all these specialist practices worked whilst still continuing with my normal job in South Africa.”

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Marsh Risk Consulting

jun 14 PAGE 13

Company profile

Following a hectic time for von Widdern in the mid 2000’s when he was responsible for strategic development in Latin America, Africa, Australia and

“We support clients with the complete foundation for risk management and regulatory compliance including standards development, training and implementation” Asia, he took on different responsibilities for Marsh in the Middle East and Africa. “From 2009 to 2011, I was given the responsibility

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of the Middle East as well as South Africa so I spent half of my time in the Middle East and half in South Africa. That was how I got to know those countries and roll out strategic value propositions for a variety of risk consulting services. “In the meantime we grew the business in South Africa and in 2011 we completed the deal where Marsh bought Alexander Forbes Risk Services and from the beginning of 2012 my focus was purely on South Africa because we then had a very large risk consulting team,” says von Widdern. “We had nearly 100 colleagues in the combined risk consulting team based on 45 from Marsh SA and the Forbes team was already 65 strong. Forbes in South Africa had nearly 800 people whereas Marsh only had around 200. “We put the teams together and they were very complimentary in terms of their skills sets,” he says. “In the local market, the approach and the value proposition of Forbes and Marsh was very similar; to give the highest quality professional service and really understand clients well. It was really the upper end of professionalism and technical competence. “Forbes by their size and history and scale, had a

Marsh Risk Consulting

100M

Average property casualty claims paid each business day in 2013

130

63,000

AIG employees worldwide

Countries where AIG has clients

What’s behind AIG’s numbers?

1.5B

Global Property per risk capacity

one

Years helping people insure brighter tomorrows

World Trade Center rebuilding as lead insurer

People. Insurance isn’t about numbers. It’s about people. In our case, 63,000 people coming together to take on the impossible challenges. Because we believe that with the right people and the right attitude you can turn even the toughest today into the brightest of tomorrows. Learn more at www.aig.com

Insurance and services provided by member companies of American International Group, Inc. Coverage may not be available in all jurisdictions and is subject to actual policy language. For additional information, please visit our website at www.aig.com. AIG South Africa Limited is a Licensed Financial Services Provider FSP No. 15805 Reg. No. 1962/003192/06

jun 14 PAGE 15

company profile very well established sectoral footprint – hospitality, financial services and others. Marsh, because of the globals, was very strong in mining, banks and some other industry elements. In almost every industry sector, Forbes had very good penetration and that was just a fact of life as they had, through their networks, grown a very solid company over 40-50 years.” In October 2013, von Widdern was named Risk Manager of the Year by the Institute of Risk Management South Africa (IRMSA) – recognising him as one of the best risk professionals in South Africa. Over the years MRC has displayed its resilience and ability, time and again, to adapt and stay ahead in an ever-changing industry sector. An inherent focus on collaboration, investment in people, innovation and thorough, analytical business practises has made it a household name for risk assessment and a trusted partner for new, untried investments as well as traditional risk areas. Von Widdern explains that the company wants to continue along the same path in the years to come, developing its areas of specialty further: “We want to be recognised as a provider of more wide scale solutions to large corporates.

“Whereas now we might do a particular area of specialised fire prevention, we have the capability to do really wide ranging solutions; materially improving the clients total cost of risk in its direct and indirect measurements. “We’ve started that journey in terms of very large clients and we’re getting good recognition for that. So, we want to see ourselves as being recognised in the future as having that ability to make a material difference to our clients across multiple areas of activity.” Encompassing MRC, Marsh Africa itself, in expanding its African footprint, is ensuring that the company will be well placed for the years of huge socioeconomic development predicted for the continent’s future – once again, displaying its ability to really understand what is needed and where it needs to develop its services. The organic growth experienced at MRC in just the last 12 months shows that the company as a whole continues to truly understand what is expected of it, but perhaps more importantly, can anticipate better than any other what is needed to maintain its leading position in the years to come

Dotting your ‘i’s and ‘crossing’ your ‘t’s Christoph Leuzinger, Executive Head: Global Corporate, Zurich South Africa With a number of global and South African companies expanding across the continent and an evolving global risk landscape becoming more interconnected, cross-border insurance has never been more pertinent. But what are the opportunities and challenges that this presents for insurers and brokers? Expansion... The demand to access Africa is increasing across all sectors, presenting opportunities for insurers operating in the specialist space. In terms of construction and telecom, the African Development Bank (AfDB) has estimated that the continent’s infrastructure investment deficit stands at a staggering US$50 billion per year. Consequently, many African governments have prioritised infrastructure development, allocating large portions of national budgets to ongoing projects, welcoming private sector participation and funding. A fundamental for successful expansion however, is energy security. The World Bank estimates electricity outages on average cost African countries around 2.1% of GDP and with little sign of a clear solution on the horizon it is no surprise that renewable energy projects are picking up pace. Fleet insurance is another opportunity as goods, products and supplies will need to be transported to other countries with each presenting its own set of risks. Barriers and borders As a result, cross-border cover has become a necessity. First and foremost, insurers will have to select local partners who are familiar with in-country regulation and governance or set up their own operations in particular markets. This is imperative as many countries have policies in place that facilitate the growth of their own insurance sectors. Insurers must also be certain about how they will deal with language and skills barriers and how they will manage these relationships. Legal and tax requirements will also be a consideration, further reiterating the importance of establishing robust networks. Here, skilled brokers who are familiar with these markets and the associated risks, and who are able to advise customers, are essential. Adding value Ultimately, operating and succeeding in this space is about guiding customers every step of the way and making sure that processes are diligently followed and fit within legislative parameters. This is what cross-border cover is all about – expertise meeting customer needs, creating a win-win for all players involved.

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Marsh Risk Consulting

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+44 (0) 1603 411569 info@industrysa.com East Coast Promotions Ltd, 2 Ardney Rise Norwich, Norfolk NR3 3QH