As we are well into 2022, we wanted to take a moment to not only reflect on the most pervading lessons learned through the COVID-19 pandemic but to also look forward, thinking strategically about how companies can apply what we have learnt to their advantage in the near future. While many trends continue to gain traction and will be of particular importance as we navigate the continued uncertainty around the coronavirus & the ongoing Russia-Ukraine war, there are emerging trends that companies should prioritize.
1. Build protection and resilience
COVID-19 has caused more people to work from home and more transactions taking place online. Cloud technology has increased in importance since 2020, which presents a challenge for cyber security. For companies that used to have centralized teams working in centralized offices, this new way of working has presented challenges in the way that teams communicate and gain access to the information they need, when they need it. That paper file in the office, is it also available online? If it is now, is it secure and only accessible to the people who need it?
It’s not just your own systems that you should be focusing on; consider who in your supply chain also has access to your data and systems. Using a secure integrated risk management system to work with suppliers, rather than sharing spreadsheets for example, can help reduce the risk of breaches.
2. Embrace a holistic approach to risk management
It is more apparent than ever that companies, operating units, and even industries do not operate in isolation. People are more cognizant that assessing and managing risk requires a more inclusive understanding and analysis of the diverse factors that can impact business success.
As such, Environmental, Social, and Governance (ESG) solutions and frameworks continue to be a key topic of strategic thought leadership as organizations of all scales strive to define and manage an ever-growing list of considerations. The considerations in 2022 include sustainability, equitable employment, and vendor risk management.
Another reason why ESG will continue to be on all of our radars in 2022 & beyond is the expanding and increasingly vocal list of key stakeholders. A diverse and passionate group of people are coming forward to express concern about the continuity and optimization around ESG initiatives.
These factors can provide both challenges and opportunities for insurers as they are positioned to add insight and direction to other parties around how companies should respond to the risk implications across multiple facets. Leaders who can grab these initiatives by the reins will be able to accelerate ESG outcomes and secure a more essential role in their organizations.
3. Use good data to predict and manage risk
Studies conducted throughout 2021 found that European captives have proved more resilient resilient to the pandemic than the rest of the world. The hard insurance market has opened up opportunities for captives, with the expectation of new formations and an increase in usage for existing.
Captives need to TAKE OWNERSHIP OF THEIR DATA to understand what risks they want to carry and those that they will put to the insurance market. Good data and analytics are both vital for this.
Meaningful analytics can help identify trends, and even model predictions when combined with third-party insights. PREDICTIVE ANALYTICS TOOLS will be essential for captives when reassessing their risk appetite in today’s world.
4. Use predictive analytics to reduce claim costs
The importance of predictive analytics cannot be understated as a key factor in driving success during the risk management process. Being able to effectively leverage data can make understanding an organization’s risk portfolio much easier.
Data science uses artificial intelligence (AI) and machine learning to put a structure to huge volumes of data, remove bias and highlight where risk managers should probe more.
Until recently, predictive analytics in risk management has typically required experienced data scientists to make sense of it. With a modern data science solution, data can be interrogated by inputting conversational language – making it suitable for general users.
All users, regardless of their experience with AI, can now quickly discover insights, identify patterns, generate risk predictions based on a huge range of data sources and benchmark their data against that of their peers. This can be used to identify the potential frequency and severity of different types of claims which can be used to focus resources on reducing the impact.
The beauty of all this is that AI can adapt as technology improves, or when new streams of data are available. Moving forward, risk managers who harness the power of AI and data science can gain a better understanding of their risk portfolio and drive optimal outcomes.
As we look ahead, risk managers can provide even more value to their organizations by mitigating supply chain risks, building resilience, using innovative technology, improving data integrity and leveraging AI and data science.