The Market Environment

Strategic Risks

Providing professional advice to deal with risk and uncertainty is at the heart of what our members do every day. The CII/CIIHK and PFS provide members with the learning and knowledge they need to be able to provide this professional advice.

This section outlines the risks which have informed the development of this Plan, the goals that have been set, and the ways in which outcomes will be delivered over the next five years. Risks are identified at global, country and Institute-specific levels.

Global Risks

The World Economic Forum published its most recent report on global risks in January 2023. The report has been produced for over two decades and is the Forum’s premier source of original global risk data. It showcases the leading risk research capabilities of two of the Institute’s largest corporate chartered firms – Marsh McLennan and Zurich Insurance Group.

Global risk is defined as the possibility of the occurrence of an event or condition which, if it occurs, would negatively impact a significant proportion of global GDP, population, or natural resources.

UK Risks

The Global Risks Report also identifies the top country risks for 2023. Whilst the Institute’s members outside the UK work in 168 countries around the world, we set out below the main risks identified in the UK, where around 90% of the Institute’s members are based.

1 Cost-of-living crisis

2 Debt crises

3 Rapid and/or sustained inflation

4 Failure of climate-change adaptation

5 Terrestrial biodiversity loss and ecosystem collapse

6 Interstate conflict

7 Asset bubble burst

1. Global risks ranked by severity over the short and long term

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2. Currently manifesting global risks

Specific External Risks

Set out below are what we believe the key external risks facing professional membership bodies such as the CII/CIIHK and PFS:

• Climate change – the failure to enforce, enact or invest in effective measures to adapt to, or mitigate the impacts of, climate change.

• Cost of living – the significant inability among broad sections of populations to maintain their current lifestyle due to increases in the cost of essential goods which are not matched with a rise in real household income.

• Post-pandemic – risk of future pandemics and the challenges of adapting to the change in working environment following the COVID-19 pandemic.

• Regulatory environment – the risk that changes in laws and regulations will materially impact the insurance, financial planning and mortgage advice sectors and the firms and individuals within these sectors.

• Technology – the intended or unintended negative consequences of technological advances on individuals, businesses, ecosystems and/ or economies.

• Cybercrime and cyber insecurity – these risks include, but are not limited to, loss of privacy, data fraud or theft, ransomware, and cyber espionage.

• Future skills – anticipating the change of roles in workplaces and/ or the change in skills required in roles as well as attracting and recruiting the right individuals for these roles.

Specific Internal Risks

Finally, we set out below the risks that are specific to the Institute and its operating entities.

• Recruiting and retaining members – the CII/CIIHK and PFS rely on the support and involvement of members to achieve their goals and maintain their operations. We operate in a competitive market, and work hard to attract and retain members.

• Engaging members – we have a large and active membership and must ensure that all members continue to feel fully invested in the CII/CIIHK and PFS.

• Changing demographics – the characteristics of our potential membership base are changing, through shifts in age, interests, and needs. The CII/CIIHK and PFS must continually adapt to the needs of existing and potential future members in order to remain relevant and effective.

• Cost of living – elevated inflation combined with a high proportion of fixed costs means we need to think creatively about how we advance member value over time.

• Governance – operating within a relatively complex governance structure requires deep coordination, shared goals, and consensus across the group.

• Technology – technological developments create opportunities which we must embrace effectively to understand and engage with our existing and potential future members.

The risks identified above have been considered in setting the strategic themes and actions in this Plan. A more detailed analysis of risk, including mitigating actions, can be seen in the Institute’s Annual Reports and Accounts.