What’s in Your Risk Management Tech Tool Kit?

In March 2012, Aon eSolutions released its second Global Risk Technology Survey. Drawing upon the responses from risk and insurance managers at more than 300 organizations in 56 countries, the survey provides insights into how organizations of varying size, location, and industry are using technology to positively impact their claims, insurance, and risk management.

This year’s survey revealed some important changes in the way risk and insurance managers think about risk technology and what it can deliver. Through all the findings, however, one theme remains consistent in both the 2009 and 2012 survey results: risk technology solutions provide a wide variety of procedural and financial benefits. The Global Risk Technology Survey (GRTS) quantifies and qualifies the business value in comprehensive, reliable risk data and the technology to translate that data into actionable business intelligence.

The respondents who participated in this survey represent a broad range of industry sectors around the world. The majority of respondents—51 percent—are publicly owned organizations, while 36 percent are privately owned. All others are primarily government agencies or not-for-profit organizations.

Top 10 Benefits of Risk Tech

Respondents were asked to identify and rank the benefits of using a risk management technology, or RMIS. The result is a top 10 list of benefits deemed most important or valuable to the organizations that participated in this year’s survey. The following list of five benefits are those likely to be of most interest to claims executives. For the entire top 10 benefits list and report, go to aon-esolutions.com/grts.

1. Accuracy and Reliability of Data

As in past years, survey respondents named accurate and reliable data the top benefit of risk technology. The scope and breadth of available data has grown considerably in recent years due to a persistently volatile economy and continually changing risk profiles. The complexity of data reporting has correspondingly increased, as has the need to analyze information from varying perspectives to produce business analytics that can guide decision making.

Based on larger trends as well as survey results, we conclude that, despite a business environment marked by heightened competition and scarcer resources (both human and fiscal), organizations continue to recognize that data consolidation and integration delivers real business value.

The benefits of accurate, reliable risk and insurance data as well as related financial information include:

• Enhanced business intelligence;
• Clearer insights into total cost of risk, benchmarking, and organizational risk profiles; and
• Improved management of daily operations.

2. Automation of Processes

In the 2012 GRTS, process automation rose in ranking from fourth to second. When processing risk and insurance information, organizations seek to increase operational efficiencies, improve quality, and achieve consistent information and communication—both within the organization and with external stakeholders.

Faced with reduced revenue, headcount, and time, businesses are increasingly looking to technology to maintain productivity and streamline workloads. Risk technology that includes customer electronic interfaces between the data sources and the organization can effectively relieve organizations of what is otherwise a manual task that is both time consuming and prone to errors.

In terms of claims reporting and exposure analysis, organizations are pursuing a standardized, automated approach to capturing information. This approach is generating improved consistency and quality of information captured.

Meanwhile, those organizations that submit their risk to the markets are increasingly relying on risk technology for greater efficiency, accuracy, and comprehensiveness in the renewal data collection process. Since businesses must annually collect exposure values—such as organizational, financial, and asset information related to risk profiles—they may have historically relied on a spreadsheet approach. This approach creates data-quality obstacles, requiring manual entry, copying, and consolidation. It also requires that someone in the organization follow up with constituents and colleagues. Risk technology automates these processes and very often yields lower premiums and better terms of coverage when compared to market averages.

3. Data Consolidation and Management

Organizations rely on accurate, timely data to reveal and manage key business risks. Consolidating and organizing this data—which flows from a wide variety of sources, including claims, policy details, and property exposures—continues to challenge many business leaders and risk management teams.

Survey results reveal, however, that more and more organizations are turning to data consolidation and management to meet these challenges. By merging data from multiple, often disparate sources and managing it from within a central technology system, organizations of all kinds enjoy consistent, reliable, data-based reporting and analysis. The value derived from timely, accurate data accrues directly to financial and operational performance.

Data consolidation and management helps the different stakeholders view, update, validate, maintain, and report from identical data sets rather than separate spreadsheet files and systems. This leads to the ability to view current, accurate data; track and manage changes; and guard against data compromise and corruption.

In addition, improvements to data consolidation and management enable businesses to increase the frequency of their reporting at all levels and, as a result, identify and address trends more quickly. Armed with an automated process for managing and reporting on data, the organization can process information regardless of when and where it is received, with notifications generated if there are issues with the data. Some organizations will exchange real-time data or run data into their system several times per day; others once per month or even annually. Effective risk technology meets these widely varying needs.

Participants in GRTS also were asked how long they have been using externally provided solutions to manage their risk data globally. Almost half—46 percent—of respondents across global regions have been using an external solution for five to 20 years. Only 16.6 percent have been using a solution for less than one year, indicating that there are fewer and fewer newcomers to these tools.

4. Management Reporting Improvements

Increasingly, organizations must manage an overwhelming amount of claims- and risk-related data from insurance companies, third-party administrators, captives, actuaries, lawyers, and many internal departments. Throughout the claim risk management lifecycle, an organization is collecting data and making decisions based on it. The need to manage and analyze this information is critical.

When data resides in silos, such as on various spreadsheets in locations around the world, there is no control, consistency, or even knowledge of who is monitoring and reporting on that data. Accurate, high-quality, and fully integrated data and management reports help to ensure organizational control and facilitate informed decision making at the management level.

Thorough management reports that can be adapted according to developments in areas such as law and regulation can help shape risk and exposure awareness with the board of directors and other important stakeholders. Transparency is crucial at every level. In addition to supporting knowledge sharing, transparency promotes accurate tracking of compliance and eliminates silos by helping to establish a central control.

5. Ease of Access to Data

This benefit, although appearing in regional rankings in 2009, is making its first appearance in the GRTS top 10. Similar to data consolidation and management, ease of access to data is a direct result of the effective use of risk technology.

By ensuring that all stakeholders—employees, management, top leadership, and authorized external stakeholders—can log on to one central location to view organizational data, businesses can expedite knowledge sharing. At a time of economic volatility and impending crises, making fast, informed decisions can be the difference between success and failure. Enabling all key personnel to gain access to data in one location makes the organization as a whole more informed, nimble, and, in turn, more competitive.

On the topic of ease of access, this year’s survey introduced a new question category: familiarity with cloud computing and confidence in the security of products used in cloud computing. More than 74 percent of the respondents said that they were familiar with cloud computing, and almost half said they were very or reasonably confident that the products used are secure.

Future Is Upon Us

The 2012 GRTS strongly indicates that there is a drive for efficiency and a demand to move risk technology beyond traditional tracking and toward a broader and more powerful context of risk management.

We conclude that risk technology continues to evolve because there are evolving needs for these solutions. Clearly, organizations are evaluating how to best manage information and anticipate change. Many are placing more confidence and reliance on risk technology to help them navigate the turbulent global economy. Indeed, even in these still-challenging economic times, 76.7 percent of survey respondents predicted that the economy and budgets would have a positive impact on the future of risk technology.

That’s good news for claims executives and risk managers, because it indicates that as risk and claims management, cost cutting, and the accurate and strategic use of business-critical information becomes more important, innovations in risk technology are expected to rise to meet demand.

GRTS Methodology

This Web-based survey addressed both qualitative and quantitative elements in how companies utilized technology to manage their risks. Responding risk managers, CROs, CFOs, and others provided feedback and insight on how they utilize risk technology for their insurance and risk management choices, interests, and concerns.

Aon Analytics conducted this survey with the support of its survey research specialists, who collected and tabulated the responses. Other staff insurance and industry specialists provided supporting analysis and helped with the interpretation of findings.

All responses from individual organizations are held confidential, with only the consolidated data being incorporated into this article and the full report online. Percentages for some of the responses may not add up to 100 percent due to rounding or respondents being able to select more than one answer.