By Shannon Harris, Senior Research Executive, Center For Financial Professionals
The IFRS 17 standard continues to be a top priority for many financial institutions as we move into the next phase of the project. Arguably due to variations in firm size, products and location the industry currently has several approaches to IFRS 17 planning and preparedness. There continues to be several unanswered questions surrounding the standard and its impacts on the business. The past eight months have allowed for in-depth discussion and analysis around the standard. However 2018 is set to be a significant year for IFRS 17 as we now focus on practical implementation. Many firms have begun the task of producing a roadmap and making vital decisions to prepare for future implementation.
In light of this The Center for Financial Professionals has conducted extensive research into the upcoming opportunities and challenges surrounding IFRS 17. Speaking to several leading industry professionals provided an exclusive insight to the top areas of focus and concern across multiple financial institutions. The key themes identified from this research have been outlined below.
One of the leading areas of focus mentioned by multiple sources was planning for implementation. As mentioned previously focus has recently shifted from review and analysis of the standard to implementation. As we enter this new phase of transition many industry professionals have questions over the most appropriate methods and approaches to use. Understandably the implementation of IFRS 17 is no easy task, and the decisions which are made now will inevitably affect the final result. But of course no one has a crystal ball and can’t predict what decisions are going to be beneficial or detrimental to the project. Therefore many industry professionals are now actively communicating with one another to get a stronger sense of industry consensus and best practice. With many firms now producing their roadmaps and preparing for parallel runs, sharing approach and planning techniques could be extremely beneficial. Having a greater understanding on approach from general insurers and life insurers would highlight some of the common themes and best practice.
Secondly another one of the top questions raised was around the amount of resources required to effectively manage and implement IFRS 17. Previously many industry professionals have been actively involved in the implementation of Solvency II, and can treat this as a learning curve. Several experts mentioned how this experience has allowed for an enhanced understanding of the resources required for successful implementation of a new standard. And arguably senior managers will also have an increased awareness of budget and staffing. One of the main challenges surrounding staffing is the ability to retain core members of the team. With IFRS 17 being a relatively new standard there has been an increased recruitment drive for those professionals with a specific skill set. Therefore, ensuring essential members of the team aren’t headhunted by competing firms is definitely a top talking point for this year. Additionally, training current staff members for the predicted outcomes of IFRS 17 is also up for debate, for example we are still hearing about discrepancies between the roles of actuaries and accountants. Ensuring efficient training and delegation could allow many firms to bridge the gap between each group.
And lastly the potential impacts on profit profile was mentioned as a leading area of uncertainty. At this stage it is simply unknown how the IFRS 17 standard will impact profits and business sustainability. With implementation not anticipated until 2021 many industry experts are left to speculate on what the market may look like post implementation. In planning and forecasting for possible scenarios many have been left to ask how they can enhance business appeal and maintain market confidence. External stakeholders and investor are vitally important to any organisation and communicating the predicted changes caused by IFRS 17 is a top area of focus. One of the ways many firms are preparing for this is to host parallel runs, this way they can practice IFRS 17 whilst operating current standards. This should give a good indication to anticipated numbers and allow for early briefings with stakeholders. Understanding and communicating the possible variations in profit as early as possible could allow for enhanced investor confidence and limit impacts.
In conclusion the next twelve months are set to be vitally important in the planning and forecasting for IFRS 17. Although implementation may seem like the distant future, arguably the hard work has already begun. Many firms are investing more time and resources to figure out the best approaches and techniques to plan for implementation. Parallel runs should allow for some exciting results and give a clear view on what the industry might look like post implementation.
The Center for Financial Professionals will be focusing on these topics and more at our highly anticipated 2nd Annual IFRS 17 Forum taking place on June 13, in London. The one day forum will bring together the industries finest to focus on progress, opportunities and implementation. Multiple presentations, panel discussions and networking opportunities will provide a platform to discuss and debate leading IFRS 17 questions. To find out more or to register for the upcoming event please visit www.cefpro.com/ifrs17 or call +44 (0) 207 164 65 82.
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