Industry Overview - The financial industry has faced unprecedented and fast-moving threats in recent years, including the COVID-19 pandemic and real-time bank runs accelerated by social media, which have disrupted traditional credit and liquidity models [3] - Chief Risk Officers (CROs) in financial institutions are under increasing pressure to manage both financial and nonfinancial risks while boosting the bottom line, requiring them to adapt to a rapidly evolving risk environment [4] Core Habits of Successful CROs - Successful CROs are explicit about their risk and resilience purpose and vision, championing a risk-aware culture across the organization [6] - They invest in and empower the next generation of risk leaders, building diverse teams and planning for leadership succession from the start [6] - Leading beyond risk, CROs engage deeply with other C-suite leaders and the board to align risk and resilience objectives with business goals [7] - They treat supervisors as partners, maintaining transparency and proactive communication to build constructive relationships [7] - CROs focus on their unique role by integrating insights across the organization to anticipate future threats and strengthen resilience [7] - They continually monitor their personal effectiveness, manage time strategically, and delegate responsibilities to maintain balance and readiness [7] Key Practices and Insights - CROs spend an average of 34% of their time with the risk function to understand team strengths and weaknesses, while dedicating up to 56% of their time engaging with the executive team and board [13][15] - Successful CROs use their unique vantage point to manage cross-cutting risks, take a long-term view, and allocate resources effectively to build organizational resilience [17] - They prioritize self-reflection and time management, with some spending up to 73% of their time preparing for potential future risks [22] Conclusion - The six habits of highly successful CROs—championing risk culture, investing in leadership, leading beyond risk, partnering with supervisors, focusing on their unique role, and improving personal effectiveness—are essential for navigating today's complex risk environment [27] - By adopting these habits, CROs can transition from risk managers to influential leaders, driving organizational success and sustainability in an ever-changing landscape [28]

Global Connections - Goods trade relationships in 2021 show that nearly 40% of trade in globally concentrated products occurs between geopolitically distant economies, making substitution difficult in the short to medium term [7] - The geopolitical distance of trade among major economies has declined, but fragmentation scenarios remain possible [7] Resources of the World - Only 10% of the technologies needed to meet global emissions reduction commitments by 2050 have been deployed, with 25 physical challenges identified for the remaining 90% [10] - Addressing the most demanding physical challenges, such as managing variable renewables and developing low-emissions industrial processes, could abate about half of energy-related emissions [10] - Key challenges include managing renewables variability, scaling emerging power systems, and securing land for renewables [11][12] Productivity & Prosperity - Productivity in the median economy has increased sixfold over the past 25 years, with 30 emerging economies in the "fast lane" of improvement [18] - Advanced-economy productivity growth has slowed by about one percentage point since the global financial crisis, with investment in digitization, automation, and AI seen as key to future growth [18] - Micro-, small, and medium-size enterprises (MSMEs) account for two-thirds of business employment in advanced economies and almost four-fifths in emerging economies, with significant productivity gaps compared to larger firms [21][22] Accelerating Competitiveness in Europe - Closing Europe's prosperity gap could increase value added by €500 billion to €1 trillion by 2030, requiring investment in areas such as energy, technology, and supply chains [24] - European corporations lag behind US counterparts in scale, performance, and investment, with a widening gap in capital expenditure and R&D spending [25][26][33] Economic Empowerment - Achieving economic empowerment could lift a quarter billion people globally above the empowerment line, with affordability challenges influenced by policy, public services, and private sector actions [28] - Higher incomes and better empowerment outcomes tend to correlate, but the effect plateaus after a certain income level [29][30] Human Potential - Tight labor markets in advanced economies could reduce GDP by 0.5% to 1.5% in 2023 due to unfilled job vacancies, with solutions including flexible work, migration programs, and initiatives to retain seniors and attract women [37][38] - AI adoption could automate up to 30% of current hours worked by 2030, requiring significant occupational transitions and new skills in advanced IT, data analytics, and critical thinking [40][41] Technology & Markets of the Future - 18 potential arenas of competition, including AI software, cybersecurity, and electric vehicles, could generate $29 trillion to $48 trillion in revenues and $2 trillion to $6 trillion in profits by 2040 [46][47] - These arenas are characterized by cutting-edge technologies, large investments, and growing markets, with the potential to increase their share of global GDP from 4% to 10-16% by 2040 [46][47]

Industry Overview - Embedded finance is one of the fastest-growing areas of financial services and e-commerce globally, yet it is still a nascent concept [3] - The embedded finance market is seeing significant demand across various verticals, including retail, airlines, and hospitality, with companies seeking to offer financial services to enhance customer loyalty and revenue [5][7] - The market is evolving rapidly, with large enterprises and SMBs (small and medium-sized businesses) increasingly interested in integrating financial services into their core offerings [7][9] Company Focus: Alviere - Alviere, originally founded as Mezu, transitioned from a consumer-facing peer-to-peer payment app to an embedded-finance platform, focusing on enabling nonfinancial institutions to offer financial services [3] - The company operates as a one-stop shop for large enterprises, providing a platform that handles compliance, licensing, and integration, allowing brands to offer financial products without developing in-house capabilities [3][5] - Alviere's platform is designed to be scalable, modern, and easy to integrate, with a focus on guiding enterprises through the entire process of embedding financial services [3][5] Key Products and Solutions - Alviere offers a diversified portfolio of financial products, including digital wallets, remittances, and cobranded debit cards, tailored to different industries and customer needs [5][7] - The company's digital wallet solution allows customers to preload funds for future purchases, enabling merchants to guarantee future sales while reducing payment processing costs [5] - Alviere also focuses on payment optimization for B2B marketplaces, enabling them to monetize transactions through features like debit cards and international transaction fees [7] Market Opportunities - The embedded finance market presents significant opportunities in sectors such as retail, airlines, and hospitality, where companies are looking to enhance customer loyalty and streamline payment processes [5][7] - Emerging markets, including Latin America (Mexico, Colombia, and Brazil), are seen as key growth areas for Alviere, with the company already operating in partnerships in these regions [9] - The SMB sector is also a growing opportunity, as more brands seek to integrate financial services into their offerings to remain competitive [7][9] Competitive Differentiation - Alviere differentiates itself by offering a fully licensed and compliant platform, ensuring that enterprises can integrate financial services without regulatory or reputational risks [7][9] - The company's focus on providing end-to-end services, including professional project management and compliance support, sets it apart from competitors that offer only API-based solutions [3][5] - Alviere's ability to adapt its offerings to different industries and customer types, rather than selling standardized products, further enhances its competitive edge [7][9] Future Vision - Alviere aims to expand its international presence, particularly in Latin America, while continuing to innovate in financial products such as lending and credit solutions [9][11] - The company envisions a future where embedded finance becomes a standard offering for large enterprises and SMBs, enabling them to enhance customer loyalty and revenue through integrated financial services [7][9] - Alviere is also exploring partnerships with banks to provide embedded finance solutions, particularly for mid-sized banks looking to modernize their offerings and compete with larger institutions [11]

Industry Overview - The report does not provide a specific industry investment rating [1][2] - The core focus appears to be on analyzing industry trends and potential opportunities through a unique lens of puzzles and word games [2] Key Themes and Insights - The report uses crossword puzzle clues and answers to metaphorically represent industry concepts and trends [2] - Various industry-related terms are embedded in the puzzle format, such as "Berkshire Hathaway headquarters" and "Nobel Prize category" [2] - The report suggests analyzing industry dynamics through unconventional perspectives, as indicated by the puzzle-based approach [2] Industry Terminology and Concepts - The report includes references to financial instruments like "Debtors' notes" [2] - It mentions industry-specific terms such as "Metropolitan region in Illinois" and "Terminix target" [2] - The report also references technological elements like "Element next to chlorine in the periodic table" [2] Cultural and Historical References - The report incorporates cultural references that may relate to industry trends, such as "1992 animated film" and "Oscar-nominated screenwriter Vardalos" [2] - Historical industry figures are mentioned, including "One of the Marx Brothers" [2] - The report uses pop culture references like "Bart Simpson shout" and "Leslie Odom Jr. in Hamilton" to illustrate industry concepts [2] Geographical and Organizational References - The report mentions significant industry locations, including "City where Berkshire Hathaway is headquartered" [2] - It references organizational structures with clues like "Org. with clubs in its logo" [2] - Geographical indicators such as "Ashtabula's lake" and "Down Under hopper" are used to represent industry dynamics [2]

Industry Overview - The report emphasizes the importance of leaders adapting their personal operating models to drive organizational change and improve productivity [5][7] - Leaders who effectively manage their priorities, roles, time, and energy are more likely to succeed in high-stakes transformations [5][7][8] Key Drivers of Personal Operating Model - **Priorities**: Leaders must clearly define their mandates and focus on high-impact problems and opportunities [9][10][15] - **Roles**: Effective leaders focus on tasks that only they can do and delegate others to create positive leverage [27][29][30] - **Time**: High-performing leaders set boundaries and establish rhythms to manage their time effectively [37][40][42] - **Energy**: Leaders must protect their health, nurture relationships, and align their work with personal meaning to sustain energy [49][52][56] Case Studies and Examples - A technology CEO successfully led a turnaround by fostering a performance-driven culture [6] - A professional-services firm improved collaboration among acquired companies by making it a visible priority [6] - An insurance CEO boosted team engagement by setting clear boundaries around his time [6] - A family-owned industrial conglomerate CEO built a new leadership bench to drive a performance transformation [32] - A European tech CEO optimized her annual calendar by organizing work into seven-week periods for better focus [43] Best Practices for Leaders - Leaders should regularly reflect on and adapt their personal operating models to stay effective [7][64] - Establishing an accountability partner can help leaders maintain focus and make necessary changes [63] - Redesigning meetings for maximum impact can improve decision-making and productivity [46][47] - Leaders should prioritize their health and relationships to sustain energy and resilience [52][56][59] Organizational Impact - Companies that adopt personal operating models across their leadership teams can achieve significant productivity gains [64] - A multinational insurance company integrated personal operating models into its leadership development program, resulting in improved organizational health and talent retention [65][66]

McKinsey & Company Insurance Practice Global Insurance Report 2025: The pursuit of growth November 2024 This publication is not intended to be used as the basis for trading in the shares of any company or for undertaking any other complex or significant financial transaction without consulting appropriate professional advisers. No part of this publication may be copied or redistributed in any form without the prior written consent of McKinsey & Company. Copyright © 2024 McKinsey & Company. All rights reserv ...

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