The Future of Risk Management is Digital
Risk management systems are becoming more important to digitally connected customers. Brokers and insurers will play an important role in supporting the digital transformation of risk management.
Digital Transformation in Risk Management
Our world is increasingly digital. Data and digital technology will continue to transform risk management. Brokers and insurers who meet their customers’ digital needs will be more likely to thrive and survive.
Digital systems and technology already exist of course, but they are mostly disconnected. A typical digitally disconnected organisation might have policy information stored in PDFs in an email inbox or shared folder, claims information on an insurers portal, risk registers in spreadsheets, and safety incidents recorded in a third-party database. Insight and data do exist but not in a format that is easily available or digestible.
The challenge and opportunity for Risk Management Information Systems (RMIS) is to connect information and present it in a way that supports organisational leaders to make informed decisions about their risks.
The range of emerging and current risks faced by organisations has never been more complex. Volatile geo-politics, environmental concerns, cyber threats, supply chain risks, sustainability and a changing liability landscape are all big challenges. Digitally connected organisations will have RMIS that brings clarity about the threats and opportunities they face.
The Future of Risk Management Information Systems
The next stage of digital transformation will be about making these connections between different systems. The digitally connected organisation will have up-to-date and accurate claims data from all its insurers and other trusted third parties automatically transferred to its RMIS. Risk registers, including details of key risks, controls, and outstanding actions to manage those risks, will be stored on the RMIS. Important policy details will also be available ensuring decision makers have access to a system that becomes the source of truth about how the full range of insurable and non-insurable risks are being managed.
Less time will be spent on admin or chasing the digitally connected customer for accurate information. The broker for a digitally connected organisation may also have access to the RMIS, allowing them to see which risks are most significant or to identify risks that are not on the radar but should be. Technology can be used to free time for developing deeper relationships, solving problems collaboratively and implementing solutions.
The opportunity for brokers and insurers is to add more value through this deeper understanding of risks, and what is being done to manage them. Access to up-to-date risk registers will give an overview of how key risks such as the economy, cyber, supply chain, climate, and sustainability are being managed. So more time can be spent on probing the gaps in existing controls and finding solutions to the customer’s risk challenges.
Organisations of all sizes can be digitally disconnected. In many ways it is harder for large organisations with legacy systems developed in isolation across different departments, teams, and locations to become truly digitally connected, but it will happen.
The current landscape is characterised by sharing spreadsheets and PDFs using email, and downloads from self-service portals to access claims information. We will move to systems connected by Application Programming Interfaces (APIs) that mean data is live and the digital ecosystem is connected across all relevant parties. Each system user will sit at the heart of this pulling data from different sources and adding their own to further improve insight.
Connected RMIS will support true Enterprise Risk Management (ERM) by bringing together data and other sources of information to provide a holistic view of risk that includes operational, strategic, insurable, and non-insurable risks.
We are in the early stages of the digitally connected future and the direction of progress is clear. Digitally connected customers will have a much greater understanding of their risk profile and be more informed. The challenge and opportunity for brokers and insurers is how to support this emerging class of customer. This will need some new and some familiar skills such as data literacy, building strong relationships, and collaborative problem solving with many stakeholders. All will play an important part in supporting early adopters of RMIS to be successful in their digital transformation.
Risk Clarity
If you don’t use RMIS or an ERM system or your current application does not meet your needs, you should consider what your needs are and how your data can be used to support your risk strategy. Risk Clarity includes RMIS and ERM tools to help organisations improve risk management. Contact us today to find out more.
