Suncorp chair Christine McLoughlin's big-picture view of governance

What's the best way to deal with emerging opportunities and challenges? Focus on the big issues, advises Suncorp chair Christine McLoughlin.

There’s nothing like a global pandemic to cut through complexities and reset priorities, says Christine McLoughlin FAICD. “There’s something about receding tides that forces you to take stock and focus on the big issues at hand.”

With 11 years’ experience as a non-executive director and extensive experience in financial services, insurance, mining and resources, telecommunications, health, education and sport, McLoughlin currently holds several roles. These include chairman of Queensland insurance and banking firm Suncorp, Chancellor of the University of Wollongong, director of Cochlear and Venues NSW, and co-founder of the Minerva Network, an NFP that supports professional sportswomen on and off the field. As such, McLoughlin is well positioned to view challenges from a range of perspectives.

Suncorp employs 13,500 staff across Australia and New Zealand. Despite being hammered by 12 major insurance events, including floods, hail and bushfires, in the 2019–20 financial year, it emerged with net profit after tax of $913m.

As 2021 unfolds, McLoughlin is keen to see Australians capture the sense of urgency, cohesion and energy that was spent on managing the health crisis — and apply it to the emerging opportunities and risks we face as a country. “We all need to work together to reignite the Australian economy and rebind the Australian people,” she urges. “Let’s not make 2020 a lost year. Let’s learn from it.”

Driving reform

McLoughlin says the lessons are widespread and profound for each sector of our economy. “The enormity of the events over the past year have brought into sharp focus what I think of as the ‘unders and overs’ of our nation — areas that we have undervalued, underestimated, underinvested in and overcomplicated, to the detriment of our economy, businesses and society. Sectors such as aged care and disability, education, childcare and our health system have been undervalued and their importance underestimated. It is apparent there has been underinvestment in critical capabilities such as technology, climate resilience and future-proofing our workforce. Our business, regulatory and industrial relations environments have become overly complicated and cumbersome, particularly for large businesses, while in the financial services industry, we see startups and disruptors not always constrained by the same impositions.”

COVID-19 has also exacerbated the pressure to keep pace with the consumer demand for digital solutions and meet changing community expectations, says McLoughlin. These challenges, against a backdrop of low interest rates and their impact on margins, asset prices and business models, makes it a truly testing time for leaders at all levels.

Setting new priorities

McLoughlin believes now is the time for every sector, business, and board to use the lessons learned to reprioritise and set the path to a smarter future.

“At Suncorp, the leadership team has taken the opportunity to do exactly this,” she says. “The business model has been simplified to focus on our core banking and insurance products and services, and we have a renewed focus on how best to leverage existing digital assets. Importantly, we’ve emerged with a greater sense of purpose and the courage to accelerate our transformation, while being mindful of our responsibilities in doing so.”

She describes the necessary transition to technology as being a “balancing act”. The move has to be orderly so as not to create too much risk, nor lose the value of what has already been invested in. “Amid such transitions, the role of the board is to challenge management to be faster, better and stronger,” says McLoughlin. “One of those challenges relates to whether we need to build an end-to-end solution, or whether we can buy in technology. The cloud has taught us there are better, more scalable ways to deliver best-in-class solutions.”

Managing cyber risk

However, the accompanying cyber risk has been weighing heavily on the minds of directors. “Cyber risk is in the top three risks of every business I’m involved in,” says McLoughlin. “This is faced by both organisations and their customers, so it is something we need to be vigilant about as a board.”

According to reports by KPMG, the acceleration of businesses towards digitisation to manage the post-pandemic world has brought an accompanying spike in fraudulent activity, including phishing emails and malware and ransomware attacks. This makes cybercrime the most significant threat facing Australians in terms of overall volume and impact to individuals and businesses, notes the Australian Signals Directorate’s Australian Cyber Security Centre (ACSC). The ACSC Annual Cyber Threat Report 2019–20 states that between 10 March and 30 June 2020, the organisation received about two cybercrime reports per day about Australians losing money or personal information to COVID-19-themed scams and online frauds. The ACSC responded to 20 cybersecurity incidents affecting COVID-19 response services or major national suppliers.

Suncorp has partnered with Queensland University of Technology, running workshops with experts from justice, finance and government sectors to build greater awareness and protections for customers in response to the rise of scams in Australia.

Using artificial intelligence

The increased use of AI is also building momentum across the insurance industry. Increasing frequency of natural disasters due to climate change make the prediction of risk increasingly complex. Suncorp is making more use of AI to obtain pricing and risk selection outcomes and exploring other ways to further its usage of data and data analytics.

“Complex modelling sits behind the pricing of risk, but better use of technology means more accurate pricing of risk,” says McLoughlin. “Insurance companies have access to a lot of useful data that, used appropriately, gives customers a better, faster and more appropriate outcome.”

McLoughlin also believes organisations will make increasing use of AI to help shape their workforces, pointing to a platform called Faethm that uses predictive modelling capability to inform future workforce pathways.

“What should be a very high priority for all boards is asking the question, how do we reskill and upskill our employees to provide rewarding careers into the future?”

The findings of the 2019 banking Royal Commission further diminished levels of trust in these institutions. But despite the impact of COVID-19 on employment and other aspects of the economy, it’s also been a time for banks and insurers to repair reputational damage. “One thing that’s come out of COVID-19 is that the journey to restore trust in financial services institutions has been accelerated,” says McLoughlin. “The industry has had the opportunity to show it understands the need to be there for its customers, with a number gravitating back to strong brand names during this period.”

Building strengths

McLoughlin assumed the role of Chancellor of the University of Wollongong In October 2020. COVID-19 has deeply impacted the higher education sector due to its reliance on international students.

“The closure of international borders and its impact on the pipeline of international students and the way we think about our cohort of students has been extraordinary,” says McLoughlin. “The university sector is now staring into those big issues and looking for different ways to address them. The strength of our tertiary institutions is a critical capability for our country and one that deserves serious attention.”

McLoughlin grew up in the Riverina region of NSW which is where she first developed her appreciation of sport as a shared family activity and a strong binder of communities. In 2017, following the Rio Olympics, McLoughlin and a group of leading businesswomen co-founded the Minerva Network (named for the Roman god of wisdom, strategic warfare and poetry) — a mentoring program that brings together Australia’s most successful businesswomen to support elite women athletes on and off the field.

During the pandemic, social distancing, border closures and lockdowns brought sports to a halt. “We had all of our athletes and all of our codes benched,” says McLoughlin. “This highlighted how we had underestimated our socially binding forces — until we lost them.” Workshops run by the Minerva Network had encouraged athletes to consider life beyond their sport — and the impacts on their career of potential injuries or being dropped from a team.

“Never, ever did we imagine what they’d be facing,” says McLoughlin. “They felt like their careers had been whisked away from under them and had no way to know what would be next.”

Workplace engagement

In November 2020, McLoughlin joined the board of implantable hearing device firm Cochlear, which sells its products in 180 countries. Investing in research and development, and providing ongoing education to staff working at the forefront of future technology, are significant parts of the organisation’s business, she notes.

Due to the deferral of Cochlear implant surgeries across the world in the face of COVID-19, Cochlear’s net profit this financial year declined by 42 per cent to $153.8m. However, the company maintained its 4000 skilled employees during the slowdown and claims that new weekly “global town hall meetings” have actually increased workplace engagement.

Keeping pace

While Australian sporting codes found new and exciting ways of continuing through COVID-19, McLoughlin has observed that different organisations and sectors embrace change at different paces. “We’re all being forced towards new ways of working, and new challenges,” she says. “People are no longer saying we will go ‘back to’ the way things were. Those words have dropped out of the vernacular, which is a good thing.

The focus is now on: ‘We can and will emerge stronger — we’ve got this’. Our ability as a nation to work across all sectors, including business and governments, to manage and contain the COVID-19 crisis during 2020 was remarkable. Taking that approach forward will ensure that we are well positioned to deal with the next set of challenges that lie ahead — as well as capitalise on the opportunities that will inevitably emerge.”