1 February 2023Analysis

Ferma urges Sweden’s EU Council Presidency to focus on cyber and sustainability

The Federation of European Risk Management Associations (FERMA) has urged the Presidency of the Council of the European Union, which passed to Sweden in January, to focus on closing the cyber and sustainability insurance protection gap. It is also calling on the insurance industry to provide more coverage to support the digital and green transitions.

In a paper titled “Contribution to the Swedish Presidency agenda – Strengthening competitiveness at EU level”, FERMA highlights the importance of effective risk leadership in supporting the Swedish Presidency’s stated ambition to strengthen European competitiveness. It notes that the country’s presidency, which runs until the end of June, comes at a time of multiple challenges from inflation, the energy crisis and war, along with the impacts of the green and digital transitions.

FERMA believes the key issues risk managers must address in this context to boost competitiveness are cyber threats, increasing influence of ESG considerations on policy, geopolitical uncertainty and non-resilient supply chains.

Regarding the digital transition, companies’ technological innovation will be crucial to Europe’s competitiveness, Ferma says, and risk managers will play a central role in helping organisations manage mounting cyber risks. It warns, however, of a growing threat of cyber risks becoming uninsurable.

“It is FERMA’s view that the cyber insurance protection gap – namely the mismatch between the increasing demand for, and lack of supply of cyber insurance – should be on policymakers’ radars, especially during the Swedish Presidency,” it notes. It urges policymakers to foster a holistic risk management approach to cyber resilience by building on the strong cybersecurity-by-design principle of the Cyber Resilience Act.

The organisation recently launched a Cyber Insurance Project to analyse current cyber challenges and provide solutions to strengthen digital competitiveness. It is also working on Project LUCY, which aims to help risk management associations in Europe replicate what AMRAE has done in France to create a set of data and information on the cyber insurance market.

FERMA is also clear that the insurance industry has a critical role in supporting the green transition.

“Encouraging companies to innovate and invest in greener and more sustainable products is a way to advance the climate agenda,” the report notes. “But financing this adaptation is key; risk managers call for increased support from insurers who have shown to be risk averse in the context of the green transition. Corporate insurance buyers require more insurance coverage for the risks required to innovate.”

Welcoming the paper, Dirk Wegener, president of FERMA, said: “Enterprise risk management is the bedrock; it enables companies to remain resilient and in business. Risk leadership is our compass to achieving what we want for our greener and more digital planet.”

Valentina Paduano, chair of FERMA's Sustainability Committee, added: “The role of risk managers is to support top management in highlighting sustainability topics at strategic levels. It is also to have an enterprise-wide perspective to address these emerging new topics through consolidated processes and strategic discussions.”