NZILA President's message
- Myles Noble
The future beckons
How will 2019 unfold for NZILA and AILA members? What's on the horizon?
I have no crystal ball, but I think the New Zealand Institute of Directors may be on the money with its research report on what should be top of mind for directors in 2019. The same issues will be alive for all of us in the insurance industry, so I thought it worthwhile to share an abbreviated version of the report.
Felicity Caird, general manager of the institute's Governance Leadership Centre, lists the top five as:
1. Culture and conduct
2. Climate change
3. Future of work
4. Mental health and wellbeing in the workplace
5. Compliance that matters
Ms Caird says ethical behaviour and a healthy organisational culture should be a priority for all boards. I agree and it should spread beyond boards and be an essential element within all organisations.
Ms Caird's pointers for 2019 include:
• Set the tone – promote, inspire and embody organisational values and expected behaviours.
• Embed oversight of culture and integrate it into discussions on performance, strategy and risk. Probe how success is being achieved and challenge assumptions.
• Ensure boards get comprehensive and timely reporting (good and bad news) from management (and other sources), with good measurements covering organisational culture, conduct risks and incidences. Use internal audit and board-only time to support robust scrutiny.
The increasing occurrence of extreme weather events, monster storms, severe temperatures, floods and fires across the world are reminders of the impacts of climate change. This is of particular importance to the insurance industry.
Ms Caird points out the UN Intergovernmental Panel on Climate Change's 2018 report demands greater urgency and highlights the disastrous effects of failing to limit global warming to 1.5°C, rather than 2°C, above pre-industrial levels.
Her tips for 2019:
• Identify material risks relating to climate change that can impact your organisation. Run scenarios with management about how things may change.
• Think about the risks and opportunities in how your business can adapt to a low-emissions economy.
• Focus on meaningful reporting and disclosures (eg what's material and impactful) for stakeholders, including investors, consumers and regulators.
Ms Caird says labour shortages, changing ways of working, and the impact of technology require adaptive talent strategies.
The “future of work” includes considering the impact of technology, demographics and other factors on work, workers and the workplace. Whole jobs are disappearing or being reshaped, which leads to concerns about increased income inequity and poverty.
Key areas of focus in the NZ Government's Future of Work forum (August 2018) were:
• “just transitions” in industries undergoing structural shifts
• introducing a lifelong learning approach to enable swift training
• understanding what new technology will do to work practices
• lifting labour productivity.
Ms Caird said we need to think about:
• What type of work our organisations' employees will be doing
• What kind of workforce we need to successfully do the work
• Can automation of some tasks help remedy productivity and labour shortage challenges?
• What type of environment and culture do organisations need to thrive in a digital and disruptive world?
Which leads to Ms Caird's fourth priority. Protecting and supporting workers' mental health and wellbeing is not just the legal and right thing to do; it has positive impacts on business performance and productivity.
According to WorkSafe NZ, 600-900 people die from work-related diseases every year and 30,000 people suffer from work-related health conditions.
Ms Caird said it's not just about doing the right thing so everyone goes home safe and healthy from work every day. “Poor mental health causes significant human and economic costs, eg increased absenteeism, sick leave, injuries and workplace conflict. Improved workplace wellbeing leads to improvements in productivity, financial performance, risk management, employee retention and recruitment,” she said.
Ms Caird's final point, compliance that matters, applies across the business spectrum, including in insurance.
But she also warns against compliance overload. “The challenge is to manage time and effort on compliance to ensure it adds value and is not undertaken for the sake of it,” she said.
Interestingly, her report noted the Directors' Fees Report 2018 found only 76% of organisations provided directors with liability insurance.
She advised boards to check their policies to ensure indemnities provided adequate cover for potential liabilities. Wise advice.
On a final note, after last year's successful lecture series we are close to announcing the 2019 speaker who will tour New Zealand in May.
Planning is in progress for the NZILA National Conference in Auckland on 11-13 September, so please save the dates.