What are the organizational impacts of IFRS Insurance?
Organizational, People and Culture
IFRS has a dramatic impact across the organization. Deloitte member firms use a four dimensional assessment to describe the impact of financial reporting changes on an insurance business. The dimensions are:
We look at the third dimension - Organization, People and Culture and highlight the key impacts
- Impact on your organization structure – The obvious changes in the finance, risk and actuarial functions alone would make IFRS Insurance a major source of organizational change. In realty many other functions will be affected. A Target Operating Model will provide clear structure, defined scope and measurable outcomes. Linking the model with the realization of benefits would help to control and manage the large IFRS Insurance implementation program
- Behavioral changes may be needed culturally to enable a sustainable approach for IFRS – The new transparency and comparability that would emerge with the adoption of IFRS Insurance removes the ‘smoke and mirrors’ to give a clearer understanding of the business which makes insurance more appealing to investors. The whole organization need to be aligned with the new way of presenting success to the Market.
- Use IFRS metrics to incentivize your business – A key step to achieve alignment is to introduce a performance management system that is based on the new IFRS Insurance metrics. Transforming management information from planning to forecasting is not an aspect of the implementation program that should be left for later. Successful transformations move from internal dimensions towards external stakeholder. Retrofitting internal performance measures to market expectations carried a higher risk of failure.
Question: Is it a Technical Challenge?
Answer: Yes, but not only that. The implementation of a new financial language to measure business performance has pervasive ramifications across the operating model of an insurer