Risk management is experiencing a “massive transition” and is in a state of chaos, according to the President of the US-based Risk and Insurance Management Society (RIMS).

But John Phelps told the group’s Risk Forum in Melbourne last week there has never been a more exciting time to be involved in the industry.

He says risk is evolving and becoming more complex, thanks to technology and movement into international markets.

“The traditional methods of 20 years ago are gone. Right now we are in this massive transition.”

He says bringing risk management into the strategic sphere is crucial, because this is “where the greatest value of our discipline can be realised”.

Reducing uncertainty allows companies to add value by taking risks, rather than simply avoiding them, he says.

A forum panel discussed insurance market reactions to future risk.

John Donnelly, Marsh Executive Director and GM Placement Services Asia-Pacific, says much depends on capital. “Right now there is a surplus of capital. The only way that will disappear is through catastrophe losses. The industry will have to lose money to make money.”

AIG’s Regional Energy Manager Australasia Rick Hogan says his company is investing now for future challenges. “We are investing in big data and have 150 people doing science and research. There is a lot of work being done on the engineering side to keep pace with new technology.”

Swiss Re’s Global Head of Mining and Energy Onshore Stanley Cochrane says investment in people must not be overlooked. “There is a generation gap, not enough people are coming into the industry. We need educated people.”

Mr Donnelly agrees young brokers will “help us old guys out with technology. These people are going to bring the organisation into the modern world.”