Why you should use a Target Operating Model (TOM) - based approach: Part 3
Achieving maximum business benefits from an IFRS Insurance implementation
Based on the four dimensional assessment of the organizational impacts of IRFS insurance used by the Deloitte member firms, it is possible to see how a TOM-based approach could contribute to the business benefits of a large scale regulatory-driven change such as that from IFRS Insurance:
- Part 1: Reporting to the Market
- Part 2: Strategy and Governance
- Part 3: Organization, People and Culture
- Part 4: Infrastructure
3. Organization, People and Culture
- The change in the measurement of insurers’ reported profit will materially affect the performance measures on which reward and long-term incentives are based. In all cases the setting of performance targets is completed at a planning/forecasting stage in the financial reporting cycle. This impact links this dimension of the operating model with the strategy and governance dimension.
- Using a TOM-based approach to manage the implementation of a change program with material impact on internally and externally reported profits will help insurers to manage changes in all the people dimensions of their operating model. Particularly the adaptation of the existing incentive principles and the alignment of externally reported indicators with those used to managed the insurer’s business internally.
- The volume of data necessary to satisfy internal management objectives is a multiple of the externally reported information. A TOM-based approach to the IFRS Implementation would bring out the scale of the change on management information at the outset of the implementation timeline allowing the design of an approach to implementation that builds on areas where finance and the wider business functions interact more regularly. This would offer a stronger internal consensus around the implementation efforts contributing to a more natural incorporation of the new IFRS Insurance language in the insurance corporate culture.