Financial education initiatives must aim to increase consumer understanding of insurance, including how to navigate in an environment with multiple delivery channels and how to seek avenues for redress where products and services fall short of expectations. Governance and risk management Insurers pursuing new distribution strategies will need appropriate governance and risk management to ensure that emerging sources of financial and operational risks are well contained. Insurers’ strategic planning process must take into account their competitive positioning, the target risk / reward trade-off and financial capacity to absorb losses. Prior to introducing a new distribution channel, insurers must ensure they have the capacity, including the appropriate expertise and resources, to adequately manage and control the  17  BNM Payment Systems Policy Department. 18  BNM IFAS and TOSS System. 4  BIS central bankers’ speeches  risks associated with that channel and possible spillovers onto existing business. Policies and procedures for managing and mitigating new types of risks will need to be developed and implemented across the whole value chain, including product development, authorisation, pricing, marketing, sales, post-sales servicing and portfolio management. These will need to be designed to ensure that the insurer continues to operate within its predetermined risk appetite and limits. Success in the new insurance distribution landscape will require strong internal communication flows to ensure that the governance and risk management across all distribution channels are fully integrated with the insurers’ operations and control functions.

New policies and procedures must be communicated in a timely manner to all relevant parts and levels of the organisation and periodically reviewed in the light of changing circumstances. In addition, more complex IT infrastructures that are central to many of the new channels will require commensurate attention to IT-related risks, which include strategic, compliance and business continuity risks. Conclusion The Austrian economist Joseph Schumpeter described “creative destruction” as “process … that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one” 19. As Asia transforms and replaces old social and economic structures with new ones, so must the insurance industry revolutionise its business models and paradigms. The challenges for insurers are significant, yet great rewards await those who seize the opportunities presented by the new environment. In so doing, not only will the industry benefit from growth but the public, who are the ultimate stakeholders, will continue to enjoy rising standards of living and protection from adversity. With many in Asia still not adequately insured, the imperative is clear – insurers must rise to the challenge and chart new pathways towards success. With that, I congratulate Asia Insurance Review for organising this most timely and relevant Asia Conference on Bancassurance & Alternative Distribution Channels. To all the speakers and participants, I wish you all a productive conference and thank you for your kind attention. 19  Capitalism, Socialism, and Democracy (1942) by Joseph Schumpeter. BIS central bankers’ speeches  5