Risk Management Information Systems are a necessary part of a risk mature organisation
02/21/2023
What are Risk Management Information Systems (RMIS) and where do they add value?
Organisations already hold a great deal of data which could enhance their risk management strategies, but this is often not fully realised or maximised. Elements such as policy limits, locations insured, incidents recorded, operational downtime, claims types, and costs, provide a rich and invaluable picture of an organisation’s risk profile. This information can then be measured and used to reduce the total cost of risk, and help to drive risk mitigation actions across an organisation, potentially leading to improved claims defensibility.
Data is often held in spreadsheets, email attachments or servers, meaning that risk data used to support insurance coverage and placement is inaccurate, difficult to access or manipulate. Additionally, it may be out of date, or difficult to interpret and compare across time periods. If colleagues struggle to engage with your risk and insurance strategy it is likely that your reporting is not helping them understand the underlying story that the data is telling. Even worse, in the event of a loss the claim may be not paid in full or even not paid at all and may represent a breach of disclosure duty under the insurance act, so the importance of clear and robust data should not be under-estimated.
There is a common misconception that RMIS are just for complex organisations with a dedicated risk manager or risk management team. This may have been the case in the past but is far from the case in today’s data-driven risk world. Any organisation that manages multiple policies or locations for their business will benefit from a RMIS. Cost is no longer prohibitive with the availability of affordable and targeted IT systems that deliver against these needs. Furthermore, for managers who increasingly expect decisions to be fast and data-driven, easy access to accurate information that can be quickly analysed contributes towards a forward-looking and robust risk strategy.
What are your needs?
Risk mature organisations of all sizes are increasingly investing in RMIS, but with a lot of choice in the market it is important to define your needs before considering the options. This will enable you to invest in a system which meets your current requirements and can be enhanced to future-proof your developing or growing business. Critical features which should be considered include:
- The ability to visualise key risk indicators such as claims numbers, claims per policy, claims paid, reserve movements and open incidents.
- Storage of current and historical policy documents, to allow easy access to renewal dates, policy limits, premiums, self-insured values, as well as being able to analyse changes in historical values.
- Details of all exposure information and locations covered by policies, which would include sums insured, vehicle and employee numbers, turnover, gross profit, current risk controls and values.
- Opportunities to make improvements by tracking incidents and investigations to help with root cause analysis and lessons learnt.
- Functionality to quickly compare current claims or incident performance with previous years.
- Link to easily access other risk management information you hold, such as enterprise risk or health and safety management.
As with any system an intuitive, clear, and easy to use interface is essential. Few people enjoy data manipulation from multiple sources, therefore having intuitive, visually appealing dashboards that summarise key information will have a significant benefit. This will help when it comes to reporting, and engaging colleagues with the information you are providing to highlight successes, agree on improvements, and drive action.
Why use a RMIS?
Here’s an example of how a RMIS has helped a customer improve their risk management
One customer had outgrown their risk management ‘systems’, which consisted of a variety of applications, spreadsheets, and documents to manage risk. Each business unit defined and categorised risk in its own way. The lack of consistency made it impossible to consolidate risk data across the organisation.
Issues:
- Inconsistencies in risk definitions and categorisation
- Impossible to consolidate risk data from multiple systems
- No access to real-time information
- Difficulties in creating timely and accurate reports
Solutions:
- A single source of truth for all risk data
- An improved user experience
- Centralised view of risk data across all locations
The customer was provided with access to the Risk Clarity RMIS tool and were quickly able to realise a number of benefits:
- The company can now visualise the relationships between risks, mitigations, and key indicators, which has improved decision-making.
- Reports that previously took weeks to pull together can now be created with just a few clicks and with real-time data.
- By streamlining and automating processes and reporting, they’ve been able to redirect one full-time employee to strategic tasks that add much more value to the organisation.
Risk Clarity provides a RMIS tool for those companies who don’t have a fit for purpose risk management software solution. The system is available for deployment today along with agreements for brokers who wish to offer it to their customer base.
