Strategic Management, Leadership, and Ethics
Strategy fundamentals
Strategy links mission, risk appetite, and resource allocation. Tools a candidate should recognize include SWOT analysis, Porter's five forces, value chain analysis, and the growth-share matrix. Insurers choose between cost leadership, differentiation (service, niche expertise, speed), and focus strategies. A frequent trap is confusing strategy with tactics: entering a new line is strategy; raising a deductible is a tactic. Strategy must be consistent with underwriting appetite and capital capacity.
Leadership and execution
Execution depends on clear accountability, performance measurement, and culture. Key concepts include stakeholder alignment, change management, succession planning, and the difference between leading and managing. Balanced scorecards and key performance indicators translate strategy into measurable targets. Questions often reward the answer that ties incentives to long-term value rather than short-term volume growth.
Ethics and conduct
Ethics goes beyond legal compliance. Core concepts: fiduciary duty, conflicts of interest, fair dealing, transparency, and the tone at the top. Ethical failures typically begin with pressure to hit targets, misaligned incentives, or unreported conflicts. Whistleblower channels, codes of conduct, and ethics training are controls. A common trap is an answer that is legal but unethical-exams prefer the answer that protects policyholders and the market's integrity.
Worked example
A manager is pressured to inflate a reserve release to hit an earnings target. The ethical response is to refuse, document the pressure, and escalate to the audit committee or compliance. Rule of thumb: if the action would embarrass the company if disclosed publicly, it is not an acceptable strategy.