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Data Analytics in Modern Risk Management

We have written in this space on the variety of uses  that insurers are finding for big data and analytics to understand customers. It seems that professional insurance customers, with the support of their brokers,  are seeing benefits from sophisticated analytics as well.  And analytics may be emerging as a critical tool for risk managers in their overall role.

As reported in the Insurance Journal, a recent survey of  corporate risk managers by Towers Watson found that 63 percent of survey respondents are either seriously or moderately concerned over a hardening property/casualty insurance market. To respond to this, the majority of respondents are preparing to take their programs to market.   Respondents indicate they are using broker supplied data and employing sophisticated techniques – including catastrophe modelling, retained loss analytics, and predictive modelling – in marketing their programmes.

Steve Levene, Risk Advisory and Brokerage practice leader for Towers Watson, says, “With all signs pointing to a hardening market, actively engaging in the use of analytics is a great way for companies to prepare themselves for change.”

Insurance purchasing may be just one area where analytics supports the professional risk management role

Norman Marks, who write extensively on corporate governance best practices, sees the role of the risk manager expanding in modern business to help analyze risks (and opportunities) in complex business environments.

He recently blogged on the expanding role of the risk manager:  “To manage the business going forward <large organizations> need the risk management capabilities to support scenario planning and risk mitigation and information based on more than just a finance or a process perspective. They need to be able to look at different markets, customers and product lines in a more sophisticated manner and ultimately to be able to adjust the dials as they try to take business forward in a more complex environment.”

As we posted back in January, “The rapidly accelerating needs of organizations to better understand and predict consumer preferences and behaviour, using larger and less structured data sources, are causing these organizations (including insurers) to adopt new enterprise models and to appoint leaders with new titles and broad responsibilities.”

Maybe ‘Risk Manager’ is one of those job titles.

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