Study shows Hong Kong insurers are leading the region in investment risk appetite, and betting on technology to deliver it

Mar 25: More than nine out of 10 (92%) of insurers in Hong Kong plan to boost risk profiles over the next two years and are turning to automation and advanced technology to manage the consequence, new research from Clearwater Analytics, the most comprehensive technology platform for investment management, shows (please see the attached press release).

 Its study with insurance asset management executives at Hong Kong firms with total assets under management of $1.31 trillion found that 52% said the risk profile of their investments had increased over the past two years. By comparison, in Singapore the research found 84% said risk profiles had increased in the past two years.

 Automation was identified as the key method for managing risk, well ahead of measures such as increased regulation and stricter capital controls.

 The regulatory environment is a key catalyst for that technology investment. When asked to identify the main drivers of increased technology spending on asset liability management, insurers point to regulatory demands, including heightened requirements for stress testing, solvency reporting, and risk disclosures.

 The specific asset class driving Hong Kong’s risk escalation is unmistakable. A striking 80% of Hong Kong insurers expect private equity and venture capital risk/reward levels to increase significantly over the next 12 months — far ahead of any other asset class and the highest such expectation recorded across the three markets surveyed. It is this pursuit of private market returns that is pushing risk profiles higher and demanding better technology to match.