Much of FedEx Corp.'s reductions in its total cost of risk have been driven by the use of data and analytics to make informed risk management and insurance decisions.

“It's so important and crucial to the job that we find ways to tell the story with numbers,” said Chad C. Jackson, staff director of risk management for Memphis, Tenn.-based FedEx.

While Mr. Jackson's team handles risk and insurance across the enterprise, each of the eight operating companies houses its own data, using different risk management information systems to capture and interpret that information.

On a quarterly basis, Mr. Jackson's department collects aggregate claims data from the operating companies. Various third-party administrators house the data that feeds the risk management information system at a particular operating company. That operating company then pulls specific claims data that is requested by Mr. Jackson's team, which then aggregates the information into an Excel format.

Getting the loss data from various operating companies “to speak the same language” to allow it to be aggregated is challenging, but it also is key, Mr. Jackson said.

Before he joined FedEx, the company focused on insurance premiums and rarely looked into loss statements.

“Now we're all focused on what I call the hazard cost of risk,” Mr. Jackson said, noting that FedEx has loss-sensitive insurance programs because it retains much of its risks.

Mary Sumner, senior vice president and client executive at Marsh Inc. in Memphis, handles FedEx's casualty, financial and environmental coverages and works with Mr. Jackson to gather data and analytics for various insurance programs.

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“We've been working real closely with him in trying to use a lot of analytics to arrive at the ideal program for his optimum premiums,” Ms. Sumner said. “It's been a process. It's still evolving.”

For its actuarial work, FedEx uses New York-based Marsh & McLennan Cos. Inc.'s Oliver Wyman unit, which processes various data to determine appropriate retentions and premium spending, she said.

“It has been very valuable. It helps us not only in knowing where the retention might need to be, but also where (the) premiums need to be. So it's a good negotiation tool with our carriers,” Ms. Sumner said.

Data and analytics played a large role in determining FedEx's substantial $10 million retention in its aviation program that resulted in $9 million of premium savings last year, Mr. Jackson said.

Without data, “I was not getting the complete picture,” he said.

“We very closely analyzed the losses and considered what taking that kind of retention would look like and how that would affect their balance sheet and making sure taking that type of retention was something they were comfortable with,” said Wynne Sharpe, vice president and account executive at Aon Risk Solutions in Houston.

“We crunched a lot of numbers around that and considered their long loss history before we put that in place,” Mr. Sharpe said.

Determining retention levels is a difficult process for any coverage line in any organization, Mr. Jackson said.

“But if you have the numbers, the full picture, you can use that as a component plus fully understanding the right qualitative components,” Mr. Jackson said. “Each of those major insurance decisions are decisions we wouldn't have been able to make without data.”