Financial turbulence – back into crisis

Published on Thu, 29/09/2022 - 16:55

Interest rates, inflation, political and economic policy are in flux – fuelling risk and uncertainty.

We didn’t expect to hear the expression quantitative easing again so soon. But this is what we are facing as the Bank of England went into crisis mode at the end of September, printing money at “whatever scale is necessary”.

The UK Government is working in the belief that its fiscal policy will boost the economy, but many fear that the policy will trigger a jump in interest rates by the Bank before the end of this year – as the Bank fulfils its mandate of keeping inflation under control – while fiscal and monetary policy appear set to pull in different directions.

Although some of the earlier sterling losses have been clawed back, weaknesses in sterling have failed to lure pension funds and insurers to committing cash to UK-focused buy-out groups. Some asset managers expressed concern about these “crazy” times and that they will not for the foreseeable future be investing in the UK when other markets offer safer and less risky options.   

Airmic will be gauging the impact of this scenario.

Risk professionals must keep up their track record of demonstrating agility in a volatile and changing world and be geared up to support their organisations through yet another set of challenges. One thing is certain – it’s not time to put away those crisis management plans but to keep the dust off them and keep them charged up for what may be ahead.

And as we head for one of the busiest insurance renewal periods, we’ll be checking in with our members and partners how these challenging times might be impacting these programmes.