Insurers’ risk functions will have to invest far more extensively in data and analytics for Chief Risk Officers (CROs) to provide senior management keener insights on carriers’ evolving risks.

According to the Accenture 2015 Risk Management Study, North American Insurance Report, risk functions use data and analytics extensively only 20 percent to 42 percent of the time in analyzing specific risk types. Only 10 percent of the respondents report that data and analytics have been fully integrated into the risk function’s daily operations. The same percentage says risk analytics are applied consistently across the organization and can help address all relevant risks and exposures. Only 4 percent say that risk analytics are integrated with strategic planning and strategic decision making.

We believe carriers have to get a grip on both internal and external data to differentiate themselves. The barriers to analytics maturity seems to center on an inability to access key data and a lack of understanding of how to use data to design and implement a risk model reflecting a business issue. Many risk functions still need to develop a closer relationship with the business to access the data they need and to model it accurately. Technology will be a powerful tool to strengthen these relationships. CROs are encouraged to do more to integrate disparate risk and finance data into a platform that enables an enterprise-wide view of exposures.

Paths to Prosperity: Choose Risk and Return
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Rahim Hirji at Manulife is excited about the impact these tools can have on risk management. “We are making investments in company-wide data warehousing and risk data aggregation, primarily to increase the timeliness of risk reporting,” he says. “In the past, it would take weeks to produce risk reports after quarter end. Today, these reports are produced earlier, and there is an increase in the use of real time estimates, which enables more responsive business decisions.”

Next time:  Risk functions will have to beef up other capabilities, as well, if CROs are going to provide senior management with insights on evolving risks.

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