How a new breed of analytics is enabling holistic risk management decision making

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The confluence of data and technology have changed the game for risk management, but most organizations have felt only partial effects. The availability and storage of data, processing power and predictive modeling techniques have increased our risk quantification abilities more than 10-fold over the last few years in the property and casualty (P&C) risk sphere. Using data and analytics to inform risk management strategies is not limited to insurers: Businesses are now seeing the benefits as well, as they aggregate data and engage in risk modeling (internally or with third parties).

A big hurdle for corporate entities is the dissemination of information and integration of risk modeling into the risk value proposition. Once again, technology is coming to the rescue. Relevance of a specific risk has hampered the engagement of risk within the C-suite. Historically, risk has been judged qualitatively and in a siloed manner, resulting in CFOs and CROs using it as supplemental information with no linkage to the big picture. Technology can now put all of these risk modeling analyses on the same platform and promote an explicit big picture risk strategy.

Quantitative decision support (return on investment) can now be applied to insurance spend and risk management resource allocation. But this is just the beginning: Aggregated risk strategies for property and casualty insurance, pensions, and health and benefits are now starting to be analyzed. Once this view is embraced by the C-suite, business, market and operational risks are likely to follow. The profile of risk management is about to change in a big way.

Risk vs. return won’t just be for portfolio investment theory anymore. Rather, it will be the driver of corporate business strategy.


 

Ben Fidlow head shot

Ben Fidlow, FCAS, MAAA, leads Willis Towers Watson’s core analytics practice globally and is responsible for the strategic implementation and delivery of industry leading decision support risk analytics to Willis’ brokerage clients.

Before joining Willis, Ben founded and led the analytics capabilities at two major insurance brokers. He has been responsible for award-winning analytical tools as well as leading advisory analytical consulting engagements for many of the Fortune 500 clients. Prior to his brokerage and consulting career, he held lead actuarial roles at various insurance and reinsurance companies.

 

Categories: Claim & Risk Control, Insurance and Risk Management, Risk Culture | Tags: ,

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