Insurers across the globe are being forced to take on additional investment risk as traditional assets fail to deliver the requisite returns to meet liabilities.
The issue is particularly pronounced in APAC where insurers have longer dated liabilities, and allocations to alternatives, private credit, infrastructure, and real assets are becoming more prevalent in portfolios.
Yet our latest survey of insurance asset management executives – representing $3.8 trillion in AUM across Hong Kong, Singapore, and Australia – finds that this trend to increased investment risk is accompanied by a growing uneasiness about the time and resources being consumed by portfolio analytics and risk management.
The APAC insurers we spoke to say they are burdened by manual processes and legacy technology, which are hampering effective moves up the risk curve.
The vast majority (85%) of respondents expect the risk profile of their investment portfolios to rise over the next two years. That comes on top of the 72% who say they have already increased their risk exposure over the previous two.
This appetite for greater risk reflects the investment pressures insurers face in a world of shifting interest-rate regimes; growing allocations to private markets; higher capital-efficiency demands; and intensifying competition for yield.
But taking on more risk also intensifies the need for better tools and more robust processes.
Modernising systems and processes is seen as more effective than increased regulation or stricter capital controls for improving operational efficiency and reducing errors. In fact, when insurers were asked how the industry should reduce and manage risk, one answer stood well above the rest: automation.
Historically, many APAC insurers have relied on spreadsheets, emailed reports, and manual reconciliations. These often create timing delays, inconsistent data formats and the inevitable human errors.
Automation helps APAC insurers by enabling faster, cleaner, and more integrated investment data flows, which support quicker regulatory reporting, better-informed risk decisions, and more accurate ALM insights.
Critically, an automated approach turns fragmented, manual data processes into a real-time, reliable information ecosystem; exactly what insurers need as they take on more investment risk and diversify portfolios.
Even as they increase risk, APAC insurers acknowledge that essential parts of their risk and analytics functions need more attention. The research reveals a strong consensus on where time and resources are lacking.
Cross-asset risk integration tops the list, signifying that insurers are struggling to stitch together fragmented data and systems into a coherent, real-time view of their full balance sheet risk.
Meanwhile, the strong results around manual processes and legacy tools illustrate that digitisation remains incomplete for many insurers, even as their portfolios become more demanding.
| Percentage of APAC insurance executives who think the amount of time and resources spent on selected portfolio analytics and risk management functions should change:
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APAC insurers are embracing risk and plan to increase the risk profiles of their investments over the next two years. But they must embrace automation for this approach to succeed.
Organisations are looking at aspects of current portfolio analytics and risk management and assessing how best to use time and resources, but more work needs to be done.
As regulatory pressures mount and portfolios become more complex, investment teams will need to replace manual processes with automation, unify data across asset classes, and streamline the time-intensive areas of risk management.
Higher risk demands higher precision, and the next two years will test whether APAC’s insurers can modernise quickly enough to manage the very risks they now plan to embrace.
Read the report