Solvency II To Theresa, a brave and faithful heart Solvency II Stakeholder Communications and Change Second Edition Gabrielle O’Donovan ROUTLEDGE Routledge Taylor & Francis Group LONDON AND NEW YORK First published 2014 by Gower Publishing Published 2016 by Routledge Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY 10017, USA Routledge is an imprint of the Taylor & Francis Group, an informa business Copyright © Gabrielle O’Donovan 2014 All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe Gabrielle O’Donovan has asserted her right under the Copyright, Designs and Patents Act, 1988, to be identified as the author of this work British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data O’Donovan, Gabrielle Solvency II : stakeholder communications and change / by Gabrielle O’Donovan pages cm Revised edition of the author’s Solvency II, published in 2011 Includes bibliographical references and index ISBN 978-1-4724-4090-7 (paperback) Business communication Organizational change I Title HF5718.O34 2014 658.4'5–dc23 2014008411 ISBN 9781472440907 (pbk) Contents List of Figures vii List of Tables ix About the Author xi About this Book xiii Forewords: Trevor Matthews and Paul Freeman xv Acknowledgementsxvii Testimonialsxix Glossary of Terms xxi 1 Introduction 1.1 EU Solvency Regime Change 1.2 Chapter Summary 1 11 Industry Impact and Response 2.1 Solvency II and Affected Entities 2.2 Solvency II and the EU Market 2.3 Beyond the EU 2.4 Chapter Summary 13 13 20 21 23 Framing the Stakeholder Challenge 3.1 The External Stakeholder Challenge 3.2 The Internal Stakeholder Challenge 3.3 Chapter Summary 25 27 30 33 The Solvency II ‘Culture Test’ 4.1 Understanding Culture 4.2 Embedding a Risk Conscious Culture 4.3 Strategy and Tactics 4.4 Chapter Summary 35 35 42 56 59 vi Solvency II Change Management 5.1 An Evolving Workplace 5.2 Communications and Change 5.3 Chapter Summary 61 61 69 77 Stakeholder Analysis 6.1 Stakeholder Identification 6.2 Stakeholder Profiling 6.3 Stakeholder Prioritization 6.4 Chapter Summary 79 79 80 88 88 The Stakeholder Communications Strategy 7.1 Introduction 7.2 Goals and Objectives 7.3 Core Principles 7.4 Audiences and Stakeholder Management 7.5 Key Messages 7.6 Branding 7.7 Consultation and Communications Planning 7.8 The RAID Log 7.9 Resourcing 7.10 Key Measures 7.11 Chapter Summary 89 91 95 96 97 99 100 101 112 115 116 117 Communication Plans 8.1 Strategic Consultation Plans 8.2 Internal Communications Plan 8.3 External Communications Plan 8.4 Chapter Summary 119 119 122 127 132 Appendices133 Bibliography139 Index143 List of Figures 1.1 1.2 The three pillars of Solvency II Progressive levels of sophistication in capital assessment 2.1 Solvency II programme status: July 2013 19 3.1 Solvency II stakeholders 26 4.1 4.2 4.3 4.4 4.5 Understanding culture embedding mechanisms The risk culture framework The Solvency II Directive and culture Characteristics of a risk culture Solvency II risk culture philosophy statement 37 39 41 43 44 5.1 The stakeholder buy-in escalator 5.2 When change is bad news 5.3 Reactions to channel mix 63 66 76 6.1 6.2 6.3 80 85 87 Solvency II programme stakeholders Classic Stakeholder Power/Interest Grid Solvency II Regulatory Stakeholder Grid 7.1 Responses to Solvency II: tactical to strategic 7.2 The Central Template and report population 7.3 Solvency II monthly reporting calendar 91 104 105 This page intentionally left blank List of Tables 1.1 1.2 Countdown to Solvency II Comparison of solvency regimes: Solvency II v Basel II 11 4.1 The levels of culture 4.2 Risk and our business 4.3 The nature of risk 4.4 Our approach to risk 4.5 Risk and reward 4.6 Ultimate accountability for risk management 4.7 Ownership of everyday risk management 4.8 The nature of integrity – a moral perspective 4.9 The nature of integrity – whole systems and processes 4.10 The nature of integrity – a sound structure 4.11 Governance 4.12 Leadership 4.13 Risk conscious decision making 4.14 Empowerment 4.15 Teamwork 4.16 Responsibility 4.17 Adaptability 4.18 Culture change: from vision to reality 36 45 46 46 47 48 49 50 50 50 51 52 52 53 54 55 56 57 5.1 Behavioural change: current state v desired state 5.2 Required behavioural outcomes 64 65 6.1 External stakeholders 6.2 Internal stakeholders 81 82 7.1 7.2 7.3 7.4 Solvency II Stakeholder Communications and the EU Directive Stakeholder management team Mapping reporting requirements The programme reporting template 93 98 103 103 .. .Solvency II To Theresa, a brave and faithful heart Solvency II Stakeholder Communications and Change Second Edition Gabrielle O’Donovan ROUTLEDGE Routledge Taylor & Francis Group LONDON AND. .. values and behaviours This approach provides optimal support for the Solvency II approval process and life in the Solvency II world The focus of Solvency II: Stakeholder Communications and Change... 103 103 x Solvency II 7.5 7.6 The Stakeholder Communications risk log Stakeholder Communications dependencies 8.1 Solvency II Strategic Consultation Plan for the Board 8.2 Solvency II key messages: