The global insurance industry is increasingly embracing risk management as a strategic partner.

A new study carried out by Towers Watson revealed 74 per cent of senior executives in major insurance companies believe their leadership sees risk management as a key function that adds value to their organisation.

Of these insurers, 73 per cent said they were satisfied with their organisation's enterprise risk management (ERM) performance, compared to just 38 per cent at businesses where the function is not seen as a strategic partner.

Martha Winslow, a senior consultant at Towers Watson, stated: "Companies that strive for strategic value in their risk management function - as opposed to simply using ERM for regulatory compliance - typically differentiate themselves, in part, by integrating risk management into their strategic decision-making process from the beginning."

She added that risk management is too often treated as an after-thought, by which point it has little chance of influencing critical business decisions.

The survey revealed 61 per cent of insurers consider regulatory requirements to have been a key driver of changes to their ERM over the past two years. This figure rose to 72 per cent in Asia Pacific and 63 per cent in Europe, but was only 47 per cent in North America.

Mike Wilkinson, Towers Watson’s Europe, Middle East and Africa risk and solvency II leader, said perceptions of risk management are moving away from seeing it solely as something that focuses on losses and fixing problems. Instead, it is being viewed as a function that can allow a company to maximise its resources on a risk-adjusted basis.

Regulatory challenges were cited as the main obstacle to ERM implementation, being cited by 46 per cent of insurers. This was followed by people challenges, which was highlighted by 45 per cent.