GPM First
Chapter 7 of Solvency II (978-1-4724-4090-7) by Gabrielle O’Donovan

The Stakeholder Communications Strategy

CHAPTER 7

Strategies steer day-to-day implementation plans and, for better or for worse, determine outcomes and results. Therefore, this chapter is wholly concerned with the development of a practical Stakeholder Communications strategy which supports the organization’s efforts to achieve Solvency II compliance, a goal which can in turn enable new and market relevant corporate strategies.

While the requirement to secure Solvency II compliance status will be a given for all, for some the connection between corporate strategies and achieving Solvency II compliance is not so clear with any implementation programme perceived as an operational level response to fill a need created by external regulatory pressures. But is this an adequate assessment? To answer the question we need to go back to 2002 when Solvency II was first conceived and consider how industry responses have varied – as illustrated in Chapter 2.

Affected entities with strong strategic management capabilities have worked proactively to understand potential impacts on the industry as a whole and on their given organization. This has set the agenda for their industry lobbying activity, allowing them to shape the debate around the final content of the EU Directive and further guidance measures. It has also helped them to develop a picture of the evolving environmental context, and informed strategic planning sessions and strategy assessment activities also. Strategy assessment methodologies will have included benchmarking, scenario planning, shareholder value analysis, core competency analysis and time-based competition. The outputs of such activities may have led to:

  • The reconfirmation of an existing customer-focused strategy (such as the ‘Treating Customers Fairly’ strategy adopted as a regulatory requirement by all UK financial institutions);

  • The creation of new pricing strategies (as mentioned previously, many investment guarantees are expected to become more expensive);

  • Changes to individual product strategies and product portfolio strategies to reap risk diversification benefits;

  • Changes to any diversification strategies (Solvency II will result in changes to the financial position of an entity which will add to or detract from existing diversification benefits);

  • The retiming of M&A strategies where an imminent merger may load excessive risk onto the existing Solvency II implementation programme in the run up to 1 January 2016.

 

Those organizations with weaker strategic management capabilities will have been more tactical in their response to the regime change, seeking merely to secure compliance status and without a line of sight of the longer term game. Because their Solvency II implementation programme has little bearing on strategic planning processes, such organizations are not best placed to evolve with the external environment and this will impact their ability to remain competitive in a Solvency II world. And then there are those who fall in the middle – organizations which adopted a ‘compliance mindset’ in the earlier phases of Solvency II and which are now working on aligning the implementation programme with business strategies. The level of response chosen by a given organization will determine the organization’s readiness for the Solvency II world, post ‘Go Live’. This is captured in Figure 7.1.

To summarize, any given Solvency II implementation programme is best placed if it has a direct relationship with corporate strategies. Such an approach supports the organization’s efforts to adapt to an evolving environment. Also, by framing Solvency II as a strategy enabler, support can be garnered across the business, making it in the interests of key business leaders to clear the path of obstacles and support programme delivery.

A Solvency II Stakeholder Communications strategy is a document which can be used by management to outline the planned approach to maximize programme stakeholder support and meet agreed goals. It can also serve to illustrate how programme management networks and interacts with audiences – a process which is iterative and evolving in nature. The strategy will have a cross-functional impact with its reach extending to external stakeholders. Key features of the strategy design include the following:

  1. Introduction

  2. Principles, goals and objectives

  3. Audiences and stakeholder management

  4. Key messages

  5. Branding

  6. Consultation and communications planning

  7. Programme stakeholder reporting

  8. Risks, assumptions, issues and dependencies

  9. Resourcing

  10. Key measures

 
Figure 7.1 Responses to Solvency II: tactical to strategic

graphics/fig7_1.jpg

 

Each section herein describes each of these elements, containing practical guidance plus useful tools and templates which can be customized to suit the needs of individual organizations. Where necessary, elaboration is provided for the benefit of those entrusted with the development of the Stakeholder Communications strategy to highlight potential challenges and solutions. The actual strategy document presented to senior executives for discussion and eventual sign off would distil the key points developed in the different sections of this chapter, and be presented together with supporting evidence such as stakeholder profiling activity outputs and a Risk Log (cf. p. 112). The format chosen to present the strategy document should suit the culture of the given organization and, based on current industry trends, is most likely to be a Word™ document and/or a PowerPoint™ deck.

7.1 Introduction

The introductory section of the strategy document can contain a background section, a scoping of ‘Stakeholder Communications’ to define the context, a review of activity to date, a brief description of research methodology and a framing of the Stakeholder Communications challenge.

7.1.1 Background

This section will describe the general business context and identify the business opportunity. This will include a reference to the environmental forces (regulatory) which are driving the implementation programme and also a high-level reference to how the organization can also take advantage of any opportunities. For example, in the UK, Solvency II builds on the ICA regime introduced by the FSA at the end of 2004. It also provides the stimulus and opportunity to enhance existing risk and capital management practices.

The background section should also reference any merger or acquisition where the other entity is in the insurance industry and where this may mean the integration of two Solvency II programme teams for the firm in question. Depending on which model is being used (standard, internal or partial) and how the merger is managed, such an arrangement could raise the risk profile of the programme, the level of change management interventions required to successfully implement change and the Stakeholder Communications requirement.

7.1.2 Scope of Stakeholder Communications

The term ‘Stakeholder Communications’ can mean different things to different people. For the purposes of this book, ‘Stakeholder Communications’ encompasses stakeholder management, stakeholder educational programmes, internal communications and external communications. In the Solvency II world, it also includes the programme stakeholder reporting process because this is a core part of Stakeholder Communications. Therefore, the Stakeholder Communications workstream is likely to be directly responsible for:

  • Stakeholder management planning and governance;

  • Solvency II programme stakeholder reporting planning and governance;

  • Stakeholder education programmes, for example Solvency II Board training and Solvency II Induction training;

  • Internal communications planning and delivery;

  • External communications planning and delivery.

 

Through its activities, this workstream will support people change management (helping people through change). Also, it will support the embedding of a risk management culture.

7.1.3 Review and Findings

The review section will summarize how Stakeholder Communications have been conducted in the past, with ‘the past’ referring to earlier stages of the Solvency II programme and to other relevant processes and practices. The review will be based on a structured gap-analysis that also considers how stakeholders perceive the organization and any gaps that need to be filled to meet strategic objectives. For example, the assessment may show that, to date, communications with stakeholders have been one-way with little opportunity for dialogue and this may be due to a lack of suitable manpower to resource Stakeholder Communications. Findings may also reflect an internally focused or ‘naval gazing’ approach with little or no interactions with external stakeholders, beyond regulators and lobby groups. This section can also identify key touchpoints which the Stakeholder Communications team will interact with across the organization in the course of their duties, for example, the Solvency II Steering Committee, internal communications, external communications, learning and development and human resources. Where such interaction is new to either party, it may be necessary to agree the processes governing the interaction.

Also, those reviewing the strategy document will want to know what steps have been taken to understand the organization’s requirement and, specifically, how data has been collated. A savvy reader would expect to see evidence of varied methodologies, for example:

  • Visits to key branches/offices;

  • Interviews with key stakeholders such as the Executive Sponsor, members of the Steering Committee and those requesting regular stakeholder reports;

  • Surveys to gather stakeholder input;

  • Desk research of historical practices;

  • Observation in the workplace of everyday practices.

 

Gathering data from a variety of sources will make it possible to establish a baseline which can be used for later measurement activities. Such groundwork adds substance to findings and proposals.

7.1.4 Framing the Challenge

At the highest level, the Stakeholder Communications challenge is framed by the EU Directive and supporting material such as the draft Level 2 measures and Level 3 Supervisory Guidance. The Directive was finalized and endorsed in May 2009 while Level 2 guidance was finalized in 2012. Key relevant articles therein include the following:

 
Table 7.1 Solvency II Stakeholder Communications and the EU Directive

EU Directive

Responsibility of the Administrative or Management Body – Article 40

Member states shall ensure that the administrative, management or supervisory body of the insurance or reinsurance undertaking has the ultimate responsibility for the compliance by the undertaking with the laws, regulation and administrative provisions adopted pursuant to this Directive.

Fit and Proper Requirements – Article 42

insurance and reinsurance undertakings shall ensure that all persons who effectively run the undertaking or have other key functions meet, at all times, the following requirements:

  1. their professional qualifications, knowledge and experience are adequate and enable sound and prudent management (fit);

  2. they are of good repute and integrity (proper).

 

Risk Management – Article 43

insurance and reinsurance undertakings shall have in place an effective risk management system comprising strategies, processes and reporting procedures necessary to identify, measure, monitor, manage and report, on a continuous basis the risks, at an individual and at an aggregated level, to which they are or could be exposed, and their interdependencies.

Level 2 Draft Regulation

General Governance Requirements – Article 249 SG1; Article 41 (1) of the Directive

insurance and reinsurance undertakings shall have in place a system of governance which complies with at least, the following:

  • to establish, implement and maintain effective cooperation, internal reporting and communication of information at all relevant levels of the undertaking.

 

internal Control system – Article 257 SG5; Article 46 (1) of the Directive

insurance and reinsurance undertakings shall have in place an appropriate culture and environment that supports effective internal control activities, effective information and communication procedures and adequate monitoring mechanisms.

Fit to the Business – Article 212 TSiM2; Article 120 of the Directive

insurance and reinsurance undertakings shall ensure that the design of the internal Model is aligned with their business and shall ensure that at least:

  • the modelling approaches reflect the nature, scale and complexity of the risks inherent in the business of the insurance or reinsurance undertaking;

  • the outputs of the internal Model and the content of the internal and external reporting of the insurance or reinsurance undertaking are consistent;

  • the outputs of the internal Model and the content of the internal and external reporting of the insurance or reinsurance undertaking are consistent.

 

internal Model Technical Provisions [IM4]

The procedure to be followed for the approval of an internal Model envisages on-going communication between the supervisory authorities and the insurance or reinsurance undertaking. it is best practice for communication to begin before the formal application is submitted to the supervisory authorities. Communication between the supervisory authorities and the insurance or reinsurance undertaking should continue throughout the assessment of the application and after the internal Model is approved through the supervisory review process.

Note: As outlined in Chapter 4, additional Articles will be relevant to the culture component of the new solvency regime.

 

The supporting ‘Level 3 Supervisory Guidance’ is currently under development and is not expected to be finalized any time soon, but in the draft guidance published pre-consultation, Guideline 6 (TSIM3) states the following requirement which has significant implications for the Stakeholder Communications workstream:

Undertakings may provide training, seminars, induction programmes or workshops on the Internal Model to management and staff using the Internal Model for decision-making. The supervisors may use interviews of senior management and ask detailed questions to persons responsible within an undertaking to assess the understanding of the Internal Model. The supervisors may also review the documentation of the minutes of the board meetings or appropriate decision-making bodies to assess compliance with the use test. 1 [47]

 

7.2 Goals and Objectives

Aligning goals and objectives can help ensure that the different communities in the workforce are working to the same drumbeat and speaking the same language. Such alignment can be achieved via a cascade effect. It can help ensure that any programme support strategies (such as this one) are organizing activities in line with programme goals and objectives.

7.2.1 Programme Goals and Objectives

Programme goals and objectives will be shaped by the EU Directive and business strategies. Examples are given below:

  • Achieve Solvency II compliance by 1 January 2016, supporting business strategies:

    • – Secure model approval (standard, internal, or partial) by the local regulator;

    • – Develop more robust capital management and risk management capabilities;

    • – Manage stakeholder interests and mitigate any issues as part of programme stakeholder management activities;

    • – Maintain the confidence of the markets up to end 4Q2015 by demonstrating capability to achieve Solvency II compliance, managing stakeholders and maintaining a strong reputation for effective risk management;

    • – Successfully integrate with the Solvency II implementation programme of any merger/acquired entity;

    • – Provide the delivery team with the support and resources necessary to deliver on objectives.

     

 

Stakeholder Communications goals and objectives

The Solvency II Stakeholder Communications strategy provides a framework for managing stakeholders and communicating programme objectives, supporting people through change and maximizing stakeholder support for Solvency II. This can be achieved as follows:

  • Support the achievement of Solvency II compliance by 1 January 2016, supporting business strategies:

    • – Drive stakeholder awareness, understanding, buy–in and commitment to Solvency II programme strategies and goals;

    • – Drive the provision of appropriate communication and engagement channels to address the needs and requirements of different external and internal stakeholders;

    • – Develop and deliver educational programmes for the programme delivery team, the Board, directly impacted staff and indirectly impacted staff;

    • – Promote the image of the Solvency II programme, sharing programme wins;

    • – Establish and embed streamlined and effective programme reporting process;

    • – Develop and roll–out appropriate messaging to help embed a risk–management culture;

    • – Provide ample communication on the nature of Solvency II, its benefits, key timelines, objectives, impacts on teams and individuals and so on, establishing dialogue via interactive forums.

     

 

When adopting any of these generic goals and objectives for a given programme, be sure to make them ‘SMART’ – specific, measurable, attainable, results–orientated and time–limited using internal programme plans. This will support the evaluation process where activities are assessed.

7.3 Core Principles

Core principles capture the essence of all Stakeholder Communications and describe key features. For example, Stakeholder Communications are:

  1. Aligned to strategy – which is cascaded down via programme goals and objectives;

  2. Based on stakeholder analysis, impacts and unique profiles;

  3. Reflecting an equitable approach – where key constituents get more resources;

  4. Reflecting a good channel mix – whereby both one–way and two–way channels are used;

  5. Supportive of Solvency II programme management goals – enabling programme leaders to reach target audiences appropriately;

  6. Efficient and effective – each consultation and communication activity is meaningful and relevant;

  7. Supportive of change – builds awareness, understanding, compliance and commitment and focused on behavioural outcomes;

  8. Supportive of culture transformation – embeds a risk culture and communicates the organization’s risk appetite organization–wide;

  9. Measures impact and results.

 

7.4 Audiences and Stakeholder Management

Understanding our audiences is fundamental to good Stakeholder Communications. The better we know them, the better our engagement strategies and the better the overall stakeholder management process.

In Chapter 3 we saw the stakeholder map from the perspective of the EU Commission and explored the stakeholder challenge faced by the European insurance industry. Before we can even start to consider how we communicate with these stakeholders, we must first identify them using stakeholder management methodologies to ensure that all our stakeholders are on our radar. From there, it will be possible to appoint individual Relationship Owners who will take responsibility for managing the particular stakeholder relationship to achieve required outcomes. They, in turn can nominate direct reports as Interface Managers to take up a supporting role. In the Solvency II context, the Executive Sponsor and Programme Director are likely to manage the majority of stakeholder relationships between them, with the remainder managed by appropriate members of the senior management team. This information can be captured on a ‘Stakeholder management team’ chart (see Table 7.2 overleaf).

This example has been populated quite randomly purely for illustrative purposes and is customized for the UK market. For non–UK markets, the names of local regulatory bodies and lobby groups, and so on, can be substituted. Also, in this diagram, these stakeholders are grouped by nature and not by their power/interest profile (although this is indicated in the third column). For the purposes of a Stakeholder Communications strategy document, it is enough to cluster stakeholders according to their nature, as the point of this exercise is to clarify who on the leadership team is responsible for which stakeholder/s. For each category (for example, external groups) an additional group ‘Other’ has added so that those adopting this chart can customize it by adding their own stakeholders to the list.

 
Table 7.2 Stakeholder management team

No.

Stakeholder

Group

Profile

Relationship owner

Interface Manager/s

External Groups

1

European Commission

HP/HI

Executive Sponsor

Nil

2

EIOPA

HP/HI

Executive Sponsor

Nil

3

CEA

HP/HI

Executive Sponsor

Programme Director

4

GCAE

HP/Hi

Programme Director

Nil

5

PRA

HP/Hi

Executive Sponsor

Programme Director

6

ABi

HP/Li

Programme Director

Programme Manager

7

CFO Forum

HP/Hi

Programme Director

Programme Manager

8

CRO Forum

HP/Hi

Programme Director

Programme Manager

9

investors/Shareholders

LP/Hi

Chief Executive Officer

Executive Sponsor

10

Analysts

LP/Hi

Chief Executive Officer

Executive Sponsor/CFO

11

Ratings Agencies

LP/HI

CHIef Executive Officer

Executive Sponsor/CFO

12

Media

LP/HI

CHIef Executive Officer

Executive Sponsor/Corporate Communications

13

Tax Office

LP/HI

Tax Director

Nil

14

Policyholders

LP/HI

Corporate Communications

Programme Director

15

Recruitmen Agencies

LP/LI

Programme Manager

Programme Mgt Office

16

Other

 

 

 

Internal Boards and Committees

17

Board

HP/HI

Executive Sponsor

Programme Director

18

Steering Committee

HP/HI

Executive Sponsor

Programme Director

19

BRCC

HP/HI

Executive Sponsor

Programme Director

20

Audit Committee

HP/HI

Executive Sponsor

Programme Director

21

Design Authority

HP/HI

Programme Director

Programme Manager

22

LeadersHIp Team

HP/HI

Executive Sponsor

Programme Manager

23

Other

 

 

 

Internal Groups

24

Directly impacted Staff

LP/HI

Programme Director

Programme Manager

25

indirectly impacted Staff

LP/LI

Programme Manager

Nil

26

Other

 

 

 

Delivery Partners

27

Programme Team

HP/HI

Programme Director

Programme Manager

28

KPMG

LP/HI

Programme Director

CFO

29

Deloitte

LP/HI

Programme Director

CFO

30

E&Y

LP/HI

Programme Director

CFO

31

IBM

LP/HI

Programme Director

iT Director

32

Anchor consultants* e.g. Pcubed

HP/HI

Programme Director

Executive Sponsor/Corporate Communications

33

Other

 

 

 

other

34

international entities

Varies

Programme Director

Varies

35

Other

 

 

 

Note: * Anchor consultants are those consultants who have a big role in the implementation programme and who are critical to programme success

This chart must be shared with any internal parties who are mentioned on it as Relationship Owners and Interface Managers so that these parties are aware of their responsibility. This will promote good practices in the business, for example ensuring that the right people in the business (senior permanent staff) are liaising with any external groups. It is recommended that Relationship Owners and Interface Managers meet as a group on a regular basis to share developments with key constituents and discuss how to manage any hot issues. 2 [48]

7.5 Key Messages

Key messages are enduring and serve as hooks for ongoing messages which will evolve as the programme evolves. Solvency II key messages can be divided into categories, for example:

  • Solvency II rational and objectives;

  • Benefits for the industry;

  • Impact on the organization;

  • Impact on teams and individuals;

  • Timelines;

  • Programme governance;

  • Messages for ‘The Markets’.

 

Key messages will serve as core tenets for additional ongoing messaging and should be signed off by the programme Steering Committee, together with core principles and assumptions (see Section 7.8.2).

Links to company values and messages

Programme messages should also be linked to company values and messages to support message alignment. This should be apparent on externally facing channels such as websites, company reports and press releases and on internally facing channels such as the programme intranet and executive blogs.

7.6 Branding

A brand is used to promote the identity of its subject which may be a person, place or thing. The brand is unique to its subject, enabling different audiences to make the same or similar associations to the brand based on how it makes them feel. The more unique the brand, the more instantaneous that association will be. It may consist of a logo, slogan or name or it may simply be the use of a particular and distinctive combination of colours to represent its subject.

A brand can be a useful tool for a Solvency II programme where the delivery team is spread across geographies as it can help to unify the troops. Corporate communications may help with brand development and roll–out. However, where the delivery team is made up of different communities from newly merged entities or from different functional areas, different organizational cultures come into play. In such scenarios it may be more productive to reinforce the idea of ‘one team’ through key messages rather than through a programme brand. To determine the most appropriate approach, explore the idea with key stakeholders to get their input.

‘Being on Brand’ means being instantly recognizable across different programme communication channels, with ongoing messaging consistent. To ensure a consistent ‘look and feel’ use standard templates for regular communication tools such as the programme dashboard. For newsletters or other publications (online or otherwise) use the same font style and standard colour schemes. Also, as the different business leaders will generate their own messages for their own local channels, ensure the programme Steering Committee signs off key messages and core principles as these will help set a consistent tone.

7.7 Consultation and Communications Planning

Managing stakeholders successfully will involve careful planning and the appropriate mix of communication and consultation activities.

7.7.1 Programme Stakeholder Reporting: A Central Component

During Solvency II implementation, much of the communication activity to key stakeholders will centre on reports to a host of constituencies with both shared and unique concerns.

Regular reporting allows one to achieve a number of objectives for example, keep stakeholders up–to–date, manage expectations, demonstrate organizational capability to deliver on Solvency II and establish an audit trail. On the external front, the UK financial services regulator requires a monthly report from all UK insurers and reinsurers while, on the internal front, the various Boards and Committees also require regular reports.

While it can be assumed that ever effort will be made to ensure that external stakeholders receive good quality reports and in a timely manner, when the overall reporting process has yet to be established internal stakeholders are the ones most likely to be affected leading to some of all of the following outcomes:

  • Board members and Committee members receiving either not enough or too much information on the Solvency II programme;

  • Board members and Committee members receiving reports from various sources that conflict with each other;

  • Solvency II Programme Director having to sign off a host of reports;

  • Requests for reports coming into different members of the team with multiples requests coming from different persons on the same team;

  • Last minute requests for reports that were not on the radar of the Solvency II programme team.

 

Any one of these issues can cause a headache for the programme director. So what does a best practice reporting process look like? It includes seven key features which together negate all of the outcomes mentioned above and ensures that stakeholders receive their reports in an efficient and effective way with the minimum stress put on programme resources. The seven features are as follows:

  1. Establishing one ‘face of internal reporting’;

  2. Establish what reports are required and their audiences;

  3. Map reporting requirements;

  4. The central template;

  5. One dashboard;

  6. Scheduled updates of information;

  7. The monthly reporting calendar.

 

One face of internal reporting

To ensure that multiple members of the team are not receiving requests for stakeholder reports, immediately appoint one person as the face of internal reporting (this may be someone in the PMO or the Stakeholder Communications Lead).

Establish requirements

Establish what reports are required and who their audiences are. It may transpire that some reports are no longer required. Also, there may be some duplication with reporting that can be eliminated. Talk to stakeholders and find out what their requirements are moving forward. Typical Solvency II reports include the following:

  • External:

    • – Regulator Report – monthly report for country financial regulator on programme status.

     

  • Internal:

    • – Board Report – regular update for Board members on programme status;

    • – Steering Committee Pack – regular update for committee members on programme status;

    • – BRCC Report – regular update for committee members on programme status;

    • – Business Change Control report – monthly programme update which serves as insert for Management Information packs;

    • – Risk and Compliance report – regular update for the Executive Director, Risk and Compliance;

    • – Design Authority papers – papers on Solvency II design for committee members to review and base decisions on.

     

 

To get an up–to–date view of what the reporting requirements are across the business, it is worth interviewing each person who requests a report. It may transpire that some requests are being made based on outdated practices while others amount to duplication. Also, re–establish the content required for each submission to identify where synergies can be achieved with data collection.

Map reporting requirements

Based on a review of the different reports and types of information required by stakeholders develop a central template which captures all the pieces of information. Again, the following example has been populated randomly for purely illustrative purposes:

 
Table 7.3 Mapping reporting requirements

 

Information Required

Report 1

Report 2

Report 3

Report 4

Report 5

Report 6

A

External Update

×

×

 

 

 

 

B

Executive Summary Update

 

×

×

×

×

×

C

Programme RAG Status

×

 

×

×

 

 

D

Summary of Key Milestones

 

 

 

×

 

 

E

Key AcHIevements

 

 

 

 

×

 

F

Detailed Milestone Plan

 

×

×

 

 

×

G

Financials

 

 

 

 

 

 

H

Resources

 

 

 

 

 

 

I

Other

 

 

 

 

 

 

J

Other

 

 

 

 

 

 

 

Such a chart serves to map stakeholder requirements and enable one to identify commonalities and differences. Once the requirement is confirmed with terminology to describe the different sections aligned, it is then possible to develop the Central Template.

The Central Template

The Central Template is a tool that can be used to update all the pieces of information required of stakeholders. Each separate piece of information is assigned a letter of the alphabet for reference purposes.

 
Table 7.4 The programme reporting template

The central Template

A. External Update

B. Executive Summary Update

C. Programme RAG Status

D. Summary of Key Milestones

E. Key Achievements

F. Detailed Milestone Plan

G. Financials

H. Resources

I. Other

J. Other

 

 
Figure 7.2 The Central Template and report population

graphics/fig7_2.jpg

 

The information stored on the Central Template can be used to populate all reports as illustrated in Figure 7.2.

One dashboard

The dashboard is a tool used by the Programme Management Office (PMO) to give a one page overview of programme status at a particular point in time. When requests for reports are dealt with independently, it can happen that different dashboards are developed based on different stakeholder information requests. If, after consideration, it is found that these requests cannot be wholly aligned, develop versions of the template which have a very similar look and feel. This benefits those senior executives who are likely to see the programme dashboard in various management information (MI) packs and saves on the confusion caused when the dashboards look different. Also, when designing a common dashboard, do ensure that Solvency II teams based in different locations and any new joiners (including merger or acquisition colleagues) are involved in the design process, so as to secure their buy–in.

Scheduled updates of information

The next thing to do is to schedule regular updates of the Central Template. These may be weekly or bi–weekly based on the needs of the organization. Updates should be scheduled after reports are in from project managers and workstream managers so that the most up–to–date information is used for programme level reports. Also, when determining the schedule, take reference from the due dates of the various reports as the shorter the time lag between a scheduled update and the submission of a particular report, the better.

 
Figure 7.3 Solvency II monthly reporting calendar

graphics/fig7_3.jpg

 

The reporting calendar

The reporting calendar can be set on a monthly basis and should capture the scheduled updates, when development of each different report commences, the individual report issue dates and any meetings where the reports will be discussed (see Figure 7.3). It may be created in hardcopy or online using a tool such as Microsoft Outlook™. The beauty of the online tool is that it can be used to prompt key parties involved in report development when a particular action is required of them. While this type of activity normally falls to PMO, the Stakeholder Communications Lead may wish to lead this process in the set–up stages, given how it can impact stakeholders.

Do keep in mind that while some of the reports you submit will be complete products for end users, for example the programme dashboard, others will be used as inserts to populate other reports for functions; for example, Business Change may prepare management information update reports for all projects and programmes across the business. Therefore, do track such processes so that it is clear how many times in a month a particular stakeholder (such as a senior executive) will be updated on Solvency II developments. Also, work with those who are using inserts to compile their own reports, to ensure that updates are not amended in any way.

Finally, if it is the case that a there is a significant time lag between a report being submitted to the Board and that report being reviewed at a Board meeting, do ensure that the person presenting the report has the most up–to–date brief and can share any new developments. Figure 7.3 is an example monthly calendar using Win Calendar™.

7.7.2 Strategic Consultation Plans

When a programme is host to large number of stakeholders and when Relationship Owners have been identified, it is useful to develop a Strategic Consultation Plan for each stakeholder. This plan will provide a one page summary of the stakeholders’ profile, key contacts, strategic issues and objectives, planned interventions, the consultation and communication channel mix of activities plus timelines. There should be little changed to the content over time, although change is not ruled out. Chapter 8 focuses on the development of plans.

7.7.3 External Communications

External communications activity is typically managed centrally by a Corporate Communications function. Typical external communication channels include press releases, interim and annual reports, presentations and question and answer sessions for the analysts and investors and press briefings. The strategy document can establish how Corporate Communications and Stakeholder Communications interact, naming key parties and roles. For example, Corporate Communications will own the various channels with the Solvency II programme owning the messages to stakeholders on Solvency II. The Solvency II Stakeholder Communications workstream will act as a ‘one–stop shop’ for Solvency II messaging, while their Corporate Communications colleagues will act as an enabler, helping to get the messages to external stakeholders using the right channels and in a timely and appropriate way. For such cooperation, activity alignment and message alignment will be key issues to manage, particularly where a parent body exists and inputs into the process.

7.7.4 Internal Communications

Internal communications activity is also typically managed centrally and often stands alone but, alternatively, it may sit in Corporate Communications or even in Human Resources. Internal communications will own organization–wide communications, a key stakeholder group being the workforce as a whole. Channels can include the main internal magazine and other publications, the company intranet and other online forums, executive blogs, events, competitions and employee engagement surveys. Again, the Stakeholder Communications workstream will act as their one–stop shop for Solvency II messaging, with their Internal Communications counterparts acting as an enabler, helping to get the messages to stakeholders in a timely and appropriate way using the right channels. The strategy document should clarify on such points to make transparent how the touchpoint functions successfully. To ensure message alignment and activity alignment, messages and plans should be shared on a regular basis. The Solvency II programme may indeed develop its own internal communication channels such as dedicated intranet pages, an executive blog and a team newsletter.

Given that 50 per cent of Solvency II programmes are being driven from back office functions there is likely to be one more key communications touchpoint and this is likely to be the local Finance or Risk Communications Manager. Their universe will be their particular functional area. The Stakeholder Communications Lead will provide them with Solvency II related messaging while they will act as an enabler, sharing functional communication channels. Where a Centre of Excellence (COE) approach has been adopted for Internal Communications, the network will act as business partners and enablers for the business and there will be clarity of roles and responsibilities. Where the COE approach does not exist, lack of clarity may exist around roles and responsibilities and this could serve as an obstacle to getting things done. Developing a plan to get clarity on such issues will require smooth operations (see Appendix 2).

7.7.5 Training and Development

Induction training

As newcomers to the Solvency II team come on–board, they need to be brought up to speed on the new regime and internal programme status. A customized induction programme can meet their needs and this may be delivered once a month by the subject matter experts.

Newcomers to the larger organization also require induction material on Solvency II. This may be incorporated into a large HR induction programme for all newcomers to the organization, and it may be followed up with brief but mandatory CBT training module on Solvency II. The latter can serve to verify that all staff have a certain level of awareness and understanding of Solvency II.

Solvency II Board training

The EU Directive is explicit in its high expectation of Board involvement in Solvency II and this responsibility cannot be delegated. In fact, the regulators will be interviewing Board members on their understanding of the organization’s risk framework and how the risk appetite is reflected in decision–making processes, as part of the process for assessing whether a firm is compliant or not. Therefore, the pressure is on for Board members to get ‘up to speed’. This is where Solvency II Board training comes in.

Key Board training topics recommended by Rory O’Connor of EMB 3 [49] include (programme) implementation plans, risk appetite and business strategy, the risk management system, the Internal Model and internal and external disclosures (this would include new metrics for M.I.). Other topics can include the responsibilities of the Board under Solvency II, the overall training approach and director requirements, assumptions and methodology, the ORSA process, the ‘use test’, the ‘culture test’ and the Solvency II balance sheet. This content can be used as the basis to create a core programme schedule with modules positioned to coincide which the Board’s BAU activity where possible. This approach introduces a practical element to the training and helps Board members make connections. Also, where possible, use real examples of the company’s risk management framework, and so on, to make the learning experience practical and meaningful. With many non–executive directors concerned that they are increasingly being expected to be no different from executive directors, using straight–forward language and real examples will help secure their buy–in for learning experience. The most effective programmes will follows these top ten best practices:

  1. Explicit alignment between learning objectives and business objectives;

  2. Positive cost/benefit ratio with measurement techniques indicating clear return on investment either in the shorter term or longer term;

  3. Learning relevant and useful, and timed with business as usual activity to make it easily transferrable back to the workplace;

  4. Learning aligned with and directly supported by organizational structure, values, performance management, and so on;

  5. Multiple methods used to drive home learning; block training supported by 1–1 sessions, role–plays, mock interviews, and so on;

  6. Content uses real examples and plain language to support the learning experience;

  7. Training programme strategy development led by training expert in line with best practices;

  8. Training delivered by subject matter experts and expert facilitators; the use of consultants for delivery allow for a strong external view on how internal practices compare with industry peers and when trainers have expert facilitation skills, this encourages open discussion and avoids a lecture approach;

  9. Board members encouraged to develop their own self–directed training, based on their learning experiences with other Boards they sit on and other industry exposure;

  10. Board meetings encourage a work habit of ongoing reflection and learning based on the new Solvency II requirements and their everyday duties.

 

Training for directly impacted staff

Training for those who use capital in their decision–making should centre on helping them to understand model outputs and how to interpret and use data, and also the risk culture philosophy and how it applies to them. Those impacted by organizational change should also be provided with training on how to manage change successfully. Face to face training is recommended so that people can ask questions to get clarity, and seek guidance.

Training for indirectly impacted staff

Those who do not use capital in their day–to–day business will be impacted by the implementation of Solvency II alongside BAU activities and the embedding of a risk culture. Programmes for these staff, such as a mandatory computer–based training (CBT) module, will focus on developing a certain level of understanding. Participant rates and results for such a module can provide a useful audit trail that demonstrates that the risk appetite and culture is being communicated across the organization.

A programme of Solvency II Business Briefings can be developed and rolled out on a priority basis with ‘high power, high interest’ stakeholders being first on the list to receive such a briefing. The material can be based on a core set of content introducing the Solvency II regime, latest timeline, and so on, with additional content added to address unique stakeholder issues. As with the Solvency II Board training programme, these briefings can be delivered by subject matter experts, with the Stakeholder Communications workstream developing the plan, coordinating materials development and driving successful roll–out.

 
Table 7.5 The Stakeholder Communications risk log

No.

Risk

Likelihood

Impact

Result

Mitigation

1

Key stakeholders not onboard in terms of Stakeholder Communications strategy and messaging.

H

M-H

Communications suffer in terms of appropriateness of messages and channels and the timeLIness of message deLIvery damaging stakeholders’ perception of the Solvency II programme.

Circulate strategy to Steering Committee and secure sign-off at the appropriate level.

2

Board members fail to convince the Regulator that the organizations risk appetite has been communicated widely, internally.

H

H

Undermines Regulator perception and rating of the organization in terms of Solvency II compLIance.

Deliver communications and training to the Board to enhance understanding of Solvency II, and support communication of organizations risk appetite widely and internally.

3

Board members fail to convince the Regulator that they understand Solvency II related issues as they should.

H

H

Undermines Regulator perception and rating of the organization in terms of Solvency II compLIance.

Deliver regular reports and Solvency II training to the Board to enhance understanding of Solvency II.

4

Key stakeholders receive poor information on Solvency II programme status (e.g. lack of info, confLIcting info, out- of-date info, too much info to digest).

H

H

Key stakeholders make wrong decisions that affect strategic direction of Solvency II programme based on poor information. CredibiLIty of Solvency II programme management is undermined.

Establish and embed Streamlined reporting process that ensures key stakeholders get external updates and programme reports efficiently and effectively.

5

Stakeholder Communications (effectively ‘People Change’) workstream marginaLIzed by technically focused programme management.

H

H

Lack of resources and support lead to a firefighting approach with LIttle proper oversight or governance processes.

Scope work, estabLIsh workstream where none formally exists, allocate appropriate resources, provide support and steer, include progress in monthly reports and programme dashboard and apply governance processes.

6

Communications fail to engage in-directly impacted internal stakeholder groups appropriately.

M

L-M

Required behavioural outcomes for key audiences not be acHIeved – for example with low levels of awareness amongst key audiences (e.g. directly impacted staff) a risk management culture could not be embedded.

Messages to stakeholders are based on identified stakeholder impacts and requirements (of Solvency II environment) and defined behavioural outcomes for each group using the ‘Buy-in Escalator’ (Ref. p. 63).

7

Communications fail to engage external stakeholder groups appropriately.

L-M

H

External stakeholders e.g. The Markets’ lack confidence in capabiLIty of organization to implement Solvency II successfully and acHIeve compLIance status.

Roll-out timely and effective Solvency II external communications plan based on stakeholder requirements and with Solvency II Steering Committee/Executive Sponsor sign-off.

8

Communications not involved in debate around ‘what is communicated’ as well as ‘how it is communicated’.

H

M

Key messages could fail to be deLIvered. Impact of these messages on audience would not be foreseen/understood. Programme could face serious resistance.

Solvency II Stakeholder Communications Lead to attend meetings and all forums where ‘what is being communicated’ is agreed.

9

Senior Stakeholders disseminate Solvency II messages via their own communication channels without consulting the Stakeholder Communications Lead.

M

M

Lack of co-ordination in communications leading to lack of aLIgnment in terms of activities and lack of aLIgnment on messaging. CredibiLIty of the Solvency II programme would be undermined.

All Solvency II messaging to go to Solvency II Stakeholder Communications Lead for programme level approval prior to dissemination.

10

Messages confLIct across various businesses (where multiple businesses exist).

M

M

Solvency II communications would not support the deLIvery of communications objectives in different parts of the business.

Stakeholder Communications Lead responsible for ensuring all Solvency II messages are aLIgned and intervenes where inconsistencies arise.

7.8 The Raid Log

Programmes and projects are made up of structured and interdependent activities that are organized to facilitate effective change. Those activities are refined down to a level of detail that can be effectively managed, defining who does what and when. If all went according to such plans, programme and project management would be quite a straightforward endeavour. However, even the best plans go wrong due to unforeseen events. In fact the reason programmes and projects often go over schedule is not because they are badly planned, but because of those unforeseen events that were not planned for. Managing such events can quite easily double the amount of time required to deliver to schedule.

RAID is a project management acronym that stands for Risks–Assumptions–Issues–Dependencies. The RAID log supplements the traditional programme or project plan. It helps help to manage the overall workload by taking into consideration risks, assumptions, issues and dependencies which can be logging on a spreadsheet, with one tab devoted for each of these four items. The RAID log should be regularly reviewed and updated in conjunction with the main plan.

7.8.1 ‘R’ for Risks

Risks are a classic component of programme and project management. Risks are potential events that could happen and lead to delays, additional costs and deteriorated quality. Risks are managed by identifying and putting into action mitigating actions that reduce the likelihood of either the risk happening or, should the risk occur, of its impact. A risk log will include a description of each risk, an indicator of the likelihood of each risk occurring, an indicator of the level of impact should a particular risk occur and a description of the mitigating actions that need to take place to decrease the likelihood of the risk occurring (and thereby its impact). Risk logs can be supplemented by supporting detail that indicates before–and–after mitigation assessments and risk owners. A Stakeholder Communications risk log would look something like that shown in Table 7.5.

7.8.2 ‘A’ for Assumptions

Assumption management is the systematic identification, analysis, planning and review of assumptions to ensure they remain appropriate (reasonable) and consistent. 4 [50] To focus assumption management, the plan or decision frames the context and assumptions are generally reserved for cases where a change in assumption would have a material bearing on the plan or decision. Often in the programme and project management context a disparate group of delivery partners are brought together to deliver on plans. Each is working in accordance with his/her own culture and experiences and unconscious assumptions. Therefore, when planning a new programme or project, it is worth capturing those unconscious assumptions that relate to fundamental principles about how work is organized and, for example, where the boundaries of roles are. Captured assumptions may then be agreed by key stakeholders, for example, the Solvency II Programme Steering Committee, and deliberately tested in the workplace.

The assumption log will include the assumption itself, and may also include the rationale for why this is assumed and the action to be taken to confirm or otherwise that the assumption is or is not valid. Assumptions that underpin how Stakeholder Communications operates may include some or all of the following:

  • Solvency II Stakeholder Communications owned by the Solvency II Stakeholder Communications workstream which liaises with interested parties at various touchpoints across the organization;

  • Solvency II key messages and assumptions are shared with relevant parties who communicate on Solvency II to ensure message alignment;

  • Solvency II Stakeholder Communications worksteam develops content for internal communications;

  • Solvency II Stakeholder Communications workstream develops content for external communications;

  • Final drafts of any Solvency II messaging is submitted to the Solvency II Stakeholder Communications Lead for approval at programme level (programme lead or executive sponsor), before dissemination into the public domain.

 

Governing principles and assumptions articulate a set of foundational concepts that underpin policies, practices and processes. They should be validated with key stakeholders.

7.8.3 ‘I’ for Issues

Issues are risks that have materialized and the issues log is where they are captured and tracked. If the risk planning activity has been conducted properly, any issues that do in fact materialize will not be a surprise and post–event contingency actions will be identified for auctioning where possible.

The issues log will include a description of each issue, the actual effect it is having (as opposed to the expected effect) and the actions that must be taken to mitigate and remove the issue.

 
Table 7.6 Stakeholder Communications dependencies

No.

the Dependencies log

1

Given the appropriate level of authority to deliver on responsibiLIties and accountabiLIties.

2

Stakeholder Communications Strategy signed off by key stakeholders.

3

Briefed and kept up-to-date on Solvency ii programme progress and any developments.

4

invited to key meetings where decisions are made that will impact Stakeholder Communications.

5

invited to key operational meetings to agree communications witHIn Solvency il programme team.

6

Provided with clear and consistent messages and an appropriate steer.

7

Provided with adequate resources to support deLIvery.

8

Provided with ample notice to produce and distribute Solvency ii communications.

9

Given sign-off on Solvency ii messaging and materials in a timely manner so as to faciLItate timely dissemination.

10

Given oversight of any final Solvency II messages prior to dissemination.

7.8.4 ‘D’ for Dependencies or Decisions

Programme and project management is not unlike normal BAU activity in that there is a service chain of internal and sometimes external customers who depend on us and who we in turn depend on to deliver. Although an individual may be working well and in line with their own schedule, they may experience a set–back when someone whom they rely on fails to deliver in time or to the required quality. Often this happens because those people whom we depend on have other priorities; what is urgent to us is not as urgent to them.

The dependencies log can help management such situations by capturing, at a minimum, whom we are dependent on, how we are dependent on them, plus what they should deliver to us and when. The log may also capture details of any agreement and when such agreements were made, plus any later variations of these.

To be positioned to deliver, the Solvency II Stakeholder Communications workstream will have specific requirements, or dependencies, that must be met. Firstly, and as with any communications role, one must be provided with input to create output; the Stakeholder Communications Lead cannot exist in a vacuum and must be kept informed of developments as they occur, and involved in key meetings. Other dependencies centre on more operational issues that enable timely and effective communications. All key dependencies are listed in the table opposite. When these dependencies are met, the Stakeholder Communications Lead will be best positioned to deliver.

Sometimes on a RAID log, ‘D’ may be taken to mean ‘Decisions’ in addition to, or instead of ‘Dependencies’. In project and programmes, decisions are sometimes made that can have a significant effect on delivery, but that impact has been poorly thought through. Decisions made along the way can create extra work, impose extra costs, and lead to confusion and frustration for those left to manage the knock on effects.

The decision log will capture, at a minimum, the decision made, its rationale, the name of the decision–maker and the details of any resulting work required. This process helps to ensure that decisions made along the way do not destabilize the plan. It also provides a useful point of reference when the questions are asked ‘Why did we decide to do that?’ and ‘Who made the decision?’

7.9 Resourcing

7.9.1 Budget

The budget for Stakeholder Communications will be determined by the overall approach taken. For example, if a low–profile approach is planned, the budget will be low. However, where a high–profile strategy is adopted, costs may be significantly higher. Also, the strategic stakeholder management planning piece is not likely to incur additional costs; rather, the majority of costs will be incurred on the delivery side of the plan and on items such as Solvency II Board training, CBT programmes and internal communications vehicles.

Consider, for example, the costs of running an in–house town–hall–type meeting. One would be forgiven for assuming that there are no costs involved, but in fact costs could include:

  • Hiring of staff event hall for main event:

    • – Fee to Social Club for use of room;

    • – Fee to Facilities management for room set–up and tidy–up;

    • – Fee to hire equipment such as microphones and audio–video equipment.

     

  • Social event that follows:

    • – Drinks;

    • – Finger food/sit down meal.

     

  • Post event:

    • – Fee for development of short video recording of event.

     

 

Other items that are likely to incur costs include off–site meetings, training materials and CBT programmes, quality publications such as booklets and support materials for roadshows.

7.9.2 Manpower

For a large programme, this workstream will consist of a workstream lead, a communications/events person, a learning and development manager and an administrative assistant. Alternatively, and for a small programme, it may consist of one individual who works with various parties across the organization to implement the strategy, with strong logistical support from the PMO. The level of resources allocated should reflect the size of the programme plus the scope and size of the workload.

Typically, the Stakeholder Management Lead will advise the Programme Director and s/he may be a member of the programme Steering Committee. Key touchpoints across the organization will include company secretariat (for Board communications), corporate communications (for external Stakeholder Communications), internal communications (to reach staff), human resources (to align with messaging and activities with the HR agenda), learning and development (for learning materials development), business leaders (to meet the requirements of impacted staff), corporate strategy (for culture and change issues) and business change control (to input into reports for the leadership team which cover all projects and programmes across the organization). His/her focus will be on planning, and tracking process against plans, while leading the team on the delivery piece.

7.10 Key Measures

The goal in the evaluation section is to lay out how to measure success on two levels – activity and results.

7.10.1 Results

At the end of the programme implementation, a review should be conducted to establish if objectives were achieved. Ideally, it will be possible to compare results achieved to business results and identify where change management activities would have had a direct impact. During implementation, such reviews should be held periodically. Ultimately, measures of success will include evidence of strong stakeholder buy–in, both internally and externally, and the ability of the Board to convince the Regulator that they have a sound understanding of Solvency II, are making risk–based decisions and have embedded a risk culture across the organization.

7.10.2 Activity

As the stakeholder engagement plan will involve a staged roll–out of communications and training activity, it is possible to track activity over time, using quantitative and qualitative measures and progress against plans. Take for example if quarterly Solvency II Board training is being held. Successful activity would include smooth logistics and elements of the project plan being implemented in a timely and effective way, with positive participant feedback and behavioural change. Reviewing such activity has the added benefit of allowing one to take corrective action if activities aren’t getting the desired results.

Based on programme milestones, choose suitable points at which to measure the success of activities and their impact. Depending on the nature of activities on the plan, other potential metrics can include:

  • Media coverage:

    • – How much coverage did the Solvency II related story receive?

    • – What was the tone of the coverage?

    • – Which media channels was the coverage in? Where was it positioned in those channels? What is the audience of that channel?

    • – Were programme key messages used?

    • – Was the company spokespeople quoted?

     

  • Company intranet Solvency II forum:

    • – How many visitors were there to the forum during a particular time period?

    • – How long did they spend in the forum?

    • – Which pages did they visit?

    • – Did they download material? Is so, what material?

    • – Did they raise questions and leave feedback?

     

  • Stakeholder buy–in to proposals:

    • – How did different stakeholders react?

    • – Are they responding as expected?

    • – Is their buy–in increasing or decreasing?

    • – What percentage of their issues and concerns has been mitigated?

    • – Overall, what percentage of stakeholders are supportive compared to day one of engagement plan rollout?

     

 

These are just a few examples of metrics. The metrics for a particular Stakeholder Communications plan will depend on the scope of the activities. Feedback can be solicited via surveys, interviews and focus groups.

7.11 Chapter Summary

A Solvency II Stakeholder Communications strategy is a document which can be used by management to outline the planned approach to maximize programme stakeholder support and meet agreed goals. It can also serve to illustrate how programme management networks and interacts with audiences – a process which is iterative and evolving in nature. The strategy will have a cross–functional impact with its reach extending to external stakeholders. Key features of the strategy design include an introduction, an outline of principles, goals and objectives, audiences and stakeholder management, key messages, branding, consultation and communications planning, programme stakeholder reporting, the RAID log (risks, assumptions, issues and dependencies), resourcing and key measures.

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