Svetlana Smiljanić of Wiener Städtische Insurance discusses how low-risk awareness affects financial stability and the actions needed to improve resilience across Central and Eastern Europe
The topic of financial resilience is very prominent in European societies. How do our society and its members perceive risks, and do they know how to manage them to improve resilience against financial hardships caused by unforeseen circumstances? Is complacency overrated, or have we become desensitised to danger? Is risk awareness correlated with economic means, and how do the citizens of the countries in our region approach protection against potential risks and take action that can provide not only peace of mind but also financial support if we are affected by something that “happens to someone else”? Does greater risk awareness increase our financial resilience? We discuss these questions with Svetlana Smiljanić, the Wiener Städtische Insurance Executive Board.
The leading insurance group in the CEE region – Vienna Insurance Group, of which your company is a part, conducted extensive research on citizens’ risk awareness. What insights did you gain?
Gallup International, on behalf of the Vienna Insurance Group (VIG), surveyed 9,000 adults in nine Central and Eastern European countries where VIG member companies operate, including Austria, Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania, Serbia, and Slovakia.
The research focused on the respondents’ perceptions of the most common risks in everyday life—health risks, work incapacity, housing risks, internet fraud, and liability for accidents or injuries. Respondents were also asked about their perceptions of the likelihood of these risks, potential losses or damages, associated costs, and what measures they take to manage risks or mitigate losses proactively.
The representative study revealed a significantly low awareness and understanding of risks and widespread misconceptions about the financial protection provided by state and social institutions. About two-thirds of the population has little or no knowledge of everyday risks related to health, work, or habits such as internet surfing. Seven out of ten respondents do not believe that risks will happen to them, despite being aware that a potentially undesirable event would result in loss and significant damage, jeopardising financial stability. Interestingly, they see salvation and support in state assistance. For example, two-thirds of respondents believe that government authorities will help in the case of health risks or work incapacity, with 60% convinced that this also applies to the loss or damage of a house or apartment. Around 40% expect this to apply to losses from internet fraud, while nearly half believe that the state also covers personal liability for damage caused. I would particularly highlight the finding that the expectation of state or social intervention increases as the likelihood of loss or damage grows!
Risk awareness is significantly low, with two-thirds of the population having little or no knowledge of everyday risks, resulting in a false sense of security that jeopardises financial stability
The data obtained through this research indicate that prevention, in the form of caution, is the most common measure to protect against potential risks, based on the assumption that “if I’m careful, it won’t happen to me.” One-third of respondents said they take more concrete steps – they have insurance covering health risks, work incapacity, and personal liability. On average, 45% of the population has insurance for risks associated with housing. Between 20% and 30% of respondents say they set aside money “just in case” these risks occur, assuming this will suffice. One in five has not taken any measures, partly due to the costs or to avoid this expense.
How do Serbians respond? Are they concerned, and do they know how to recognise risks? What do they do?
A significant number of citizens participated in the survey of our country – as many as 1,000 respondents from various professions, life stages, and environments. Survey data show that in Serbia, risk awareness and the likelihood assessment are 3 to 5 percentage points lower than the responses of surveyed citizens in the overall sample. The estimated damage costs due to risk occurrence are significantly lower – by as much as 10% for all examined risks compared to the findings from the collective sample, which includes respondents from all nine countries.
People in Serbia do not take the necessary steps to reduce the consequences of risks because of costs, avoidance of stressful situations, and a lack of risk awareness. Most people have not yet seriously addressed the main risks they face in modern life, even though they cause significant financial loss.
What measures do Serbians most often take after becoming aware of risks, especially concerning cars and homes, which have been increasingly affected by weather disasters in recent years, and, for example, their health?
Among the actions taken by citizens of Serbia to mitigate the effects of risks, the prevailing opinion is that if they are cautious and “take care of themselves,” they can avoid these risks. More than three-quarters of respondents believe that risks won’t happen to them. In Serbia, the percentage of people who take no action to minimise the potential financial consequences of everyday risks is significantly above the average in other surveyed countries – half of respondents deal with risks by ignoring them or avoiding confronting and assessing them. In other countries, the % of such “suppressors” in the survey is lower, at 33%. By suppressing stressful emotions, suppressors rarely experience fear or concern. They are confident they have their lives under control, avoid stressful situations and problems, and take no action, or as we might say, “run from the problem.”
What is VIG’s strategic approach to raising awareness of risks in the CEE region, and how will this contribute to social sustainability?
Member companies are encouraged to raise awareness of risks at the group level through their ESG strategies for a sustainable societal future. This is done through a risk literacy program that includes a range of targeted actions aimed at frequently sharing information and knowledge and educating citizens to raise awareness of risks. Our mission is to build a more responsible society and financially more resilient individuals and communities. We can make a significant impact in raising awareness and, in doing so, strengthening citizens’ financial empowerment.
To better understand the survey’s findings, it is essential to note that risk literacy refers to the ability to make informed and rational decisions about risk management. The key components of risk literacy are risk perception and relevance, knowledge of risk management, and readiness to act to mitigate loss or damage.
In Serbia, half of the respondents deal with risks by ignoring or avoiding them, showing a gap in risk management that leaves individuals financially vulnerable
A significant proportion of respondents are likely aware of gaps in their knowledge of risk. More than one in two respondents would like more information and advice from experts. About the same number would be willing to contribute financially to protect themselves from loss or damage. For this reason, VIG is responsible for meeting citizens’ needs for information and advice, providing explanations, and raising awareness. This is why it is dedicated to raising risk awareness and addressing this critical social issue that has yet to receive much attention in its operating countries.
Given that “risk illiteracy” correlates somewhat with a lack of financial literacy, what targeted actions are you taking in Serbia?
Parallels can be drawn between the lack of risk awareness findings and the topic currently being discussed – the lack of financial literacy. The study reveals that 80% of people aged 18 to 29 and 70% of those older than 30 have limited or moderate knowledge of economic management. The conclusion is clear – there is a need for education and information in this area.
To increase high school students’ knowledge of risks, our company has joined the national program “Financial Literacy” in partnership with the Junior Achievement Serbia organisation. The program significantly impacts around 10% of high schools in Serbia. Our colleagues, who have undergone training, act as mentors and lecturers at workshops held as part of the project. They help young people learn how to budget and manage their finances properly and teach them to assess risks and take appropriate actions regarding them, which makes them more resilient and responsible for the future. It is incredible how interested young people are in hearing, understanding, and suggesting actions. In the coming years, we plan to develop a wide range of initiatives through our communication channels, in partnerships with relevant stakeholders, and by launching our targeted programs to increase awareness of risks and thus improve the financial resilience of our citizens and society.
