10 Sep Lack of Diversity is Risky Business according to Business Risk Professionals
After spending two days last week at the Diversity and Inclusion Institute’s (DII) Conference of Business Insurance professionals, I came away with a new and powerful lens for looking at Diversity and Inclusion (D&I) as critical levers in enterprise risk management.
When I go to conferences, I look for the three I’s: “Insightful” comments, an “Inclusive” environment, and “Inspiration.” I think my time is well-spent, if I get two of the three I’s. This time, I got all three! Judging by the informal comments I heard and the testimonials, I was not alone.
The conference provided a variety of engaging ways to explore how risk management and Diversity and Inclusion intersect. Let’s talk about the three key reasons why risk professionals believe that D&I can reduce risks.
It’s about the Talent Gap
While the market for skilled labor is quite tight across the US, the Insurance industry is facing a particularly challenging situation.
Based on survey results in the “Talent 2025 Report” by Willis Towers Watson and RIMS (Risk Management Society), only 16% of respondents “project they will have sufficient graduates to meet market demands by 2025.” The industry is hiring at record levels, but talent remains the biggest challenge insurance companies are facing, with an estimated 400,000 jobs expected to go unfilled by 2020, as reported by TalentGuard.
With this level of talent gap, leaders in the industry recognize they must find talent in new and innovative ways, and diversity in hiring is no longer nice to have, but a must have to manage the risks associated with their forecasted talent gap.
It’s about Claims
Meanwhile, over the last 20 years, employee lawsuits have risen roughly 400%, according to
Trusted Choice. These are not limited to large public companies. In fact, over 40% of employee lawsuits are brought against private companies with less than 100 employees.
Experienced Risk professionals at the Conference saw workforce diversity reducing their exposure to claims on two fronts. First, a more diverse team leads to an internal culture that is less prone in the first place to broad-based and systemic bias, discrimination, and inappropriate behavior towards employees, partners, customers or suppliers. Secondly, diversity provides an effective means of defense in terms of the evidence that can be provided by the organization, and their employees who can attest to it.
It’s about Transformation
In a complex world where the rate of change is only accelerating with technology and globalization, new risks are emerging every day. Many industry leaders recognize that they must stay ahead of the trends to adequately cover their clients, and also protect their shareholders’ interests. Cybersecurity, data privacy, #MeToo, and the sharing economy are examples where new risks are emerging, and traditional risks are changing in nature, or shifting in unexpected ways. So risk professionals are smart to broaden their horizons and shift their mindset towards enterprise risk management. As the RIMS 2019 President, Gloria Brosius, said: “Five years from now, shifts may be complete and those who didn’t at least plan ahead will be left behind.”
These shifts also contribute to criticality of D&I as a key lever to generate fresh ideas and ways of managing risks for clients, as well as shareholders and other key stakeholders in the insurance industry.
At the end of my two days at the Business Insurance DII conference, I came away with many new friends, and a fresh lens on diversity and inclusion as a strategic priority for mitigating enterprise risks.
These types of risks exist in one way or another across most other industries. Risk professionals are smart to recognize them, have honest and open conversations about them, and look to D&I as a strategy for mitigating them.
Photo credit: Photo by bady qb on Unsplash
