3 Risk Management Challenges for Your Business To Get In Front Of
In hundreds of conversations with risk professionals at the RIMS 2017 conference in Philadelphia, a common thread emerged: Innovation. I heard it in terms of business growth and expansion, but also in the way it creates uncertainty and new risk implications. Risk executives everywhere are striving to balance the need to manage traditional risks against the rising expectations to identify what’s around the corner as innovation brings new opportunities.
For organizations looking to better manage the risks inherent in innovation, here are three ideas to keep in mind.
Transformative Technology is Accelerating
The pace at which organizations are adopting disruptive technology has a ripple effect on insurance and risk management. Risk professionals must be proactive in the race to stay ahead of the risks that come with these disruptive applications.
Two concerning trends: Many risk professionals seem to be unclear about the effect disruptive technologies are having on their industries. At the same time, less than 50% of organizations with formal risk committees regularly review emerging risks.
A counterbalance: Many forward-thinking organizations understand the issues. And many are eager to not only learn about, but develop and deploy the latest breakthroughs.
Abundant Insurance and Alternative Capital is Fueling Innovation
In the current environment, well-capitalized insurers are looking to accelerate the pace at which they drive innovation. Fierce competitive pressures fuel new product development as insurers look to differentiate themselves, and new alternative capital entrants will help drive this change.
Insurance buyers should take advantage of these options, including aggressively seeking expanded coverage to address the myriad of new risks that can arise from disruptive technologies and the complexities of our global operating environment. Solid analytical modeling will be key, so organizations should look to invest with experienced insurers and others to facilitate innovation.
Analytical Insights Are Table Stakes
Data and analytics are increasingly woven into our lives. Businesses should expect a high level of tangible insights that are based on deep analytical perspectives — and both risk professionals and C-suite executives agree that investing in and improving the use of data and analytics should be a risk management priority.
The intersection of data, technology, and analytics will enable more efficient insurance purchases. Beyond that, it will provide a foundational approach to creating an optimal balance of risk and capital specific to a corporation’s individual risk bearing capacity.
As organizations reap the benefits of disruptive technologies, staying abreast of changes in risk profiles will be increasingly challenging. I left RIMS 2017 feeling confident that risk professionals are gearing up to meet those challenges by investing in data and analytics, developing internal governance that encourages conversations around emerging risks, and discovering innovative risk finance opportunities.