For risk management to keep pace with the rise of digital and competitive industry challenges, insurers will need to focus on a number of key priorities, including strengthening their data and analytics capabilities.
Insurance is a data-driven activity and the transformation that is taking place around big data is fundamentally changing the industry. Insurers should get to grips with both internal and external data to find ways of implementing business strategies that can help differentiate themselves. Getting access to more and better data will be a key factor in enhancing operational risk management.
Predictive analytics, for example, offers underwriters the ability to price risk much more accurately by sifting through historical information to predict future behavior. These tools could help predict customer churn and provide carriers the ability to intervene with relevant offers.
However, data and analytics remains an area of weakness for many insurers surveyed for Accenture’s 2015 Global Risk Management Study—some parts of the business might now be embracing analytics, but the risk function has been slower to do so. Asked about the challenges impeding the overall effectiveness of the organization’s risk function, insurance respondents point to the variety, velocity and volume of data as the number one obstacle. To help them capitalize more fully on the available data, two-thirds of those surveyed plan to invest more in data and analytics, and 30 percent intend to increase their investments in this area by at least 20 percent.
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