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LAKE LANIER ISLANDS, Ga.-Choosing a risk management information system requires careful assessment of which system best matches a user's needs, a consultant says.
Risk managers also must help oversee installation, encourage users to embrace the new system and keep expectations realistic of what the technology can achieve, said George Netherton, president of Risk Laboratories L.L.C. in Roswell, Ga.
The ultimate goal of an RMIS is to make risk management functions faster and more efficient, he said.
RMIS fall into two general categories, Mr. Netherton said in addressing the annual fall conference of the Society of Risk Management Consultants earlier this month in Lake Lanier Islands, Ga.
One is claims administration; the other is risk management analysis, for those who "want to be able to understand what's going on," he said.
A company must first determine which of those functions it wants from a system.
An ideal system can do both, but many companies don't need the claims administration aspect-as that may be outsourced-and prefer to focus on analyzing their risks and losses, Mr. Netherton observed.
Four main factors should determine what kind of RMIS to buy, he said:
The power required. To determine how powerful a system to buy, the number of users and sites for the system are critical, Mr. Netherton said. Also, the number of data sources must be assessed. A data source could be an insurer or third-party administrator.
Service requirements. The purchaser must be able to operate and maintain the system. Often, problems with a system are from a lack of training of the people working it, he said.
A large part of servicing a new information system occurs in converting data to the new from the old system, he said. This is a labor-intensive and tedious process.
Features. Some risk managers have special requirements, such as document imaging capabilities, noted Mr. Netherton. A risk manager needs to assure a system's features are adequate to meet users' needs, he said.
Cost. An accurate measure of RMIS cost involves not just the up-front payment but also long-term costs for training and data conversion, Mr. Netherton said. Also, to stay current, upgrades may be required.
Risk management information systems have greatly evolved in the past 30 years. When first introduced, they featured simple loss information run on remote mainframe computers.
About 15 years ago, a second stage of development began, with the increased use of networked desktop computers, he said. Although these lacked the power of mainframes, they had more functions.
Today the RMIS industry is in a third stage, utilizing client-server technology. This technology combines the power of a mainframe with the user maintaining control of the data, not the mainframe owner, he said.
The next stage is coming soon. It includes 32-bit technology that allows running advanced software applications in the Windows 95 or Windows NT operating system.
Once an RMIS is chosen, however, the risk manager's job is not complete. He or she still must oversee system installation and communicate any concerns to the vendor.
The primary reason new systems don't achieve their goals is users don't accept them. "It's a gut-wrenching process" for them, he said. So they must become part of the changeover and "buy in," he said.
Risk managers sometimes think their new systems will solve all their problems, he said.
The ultimate gauge of success with a new system is whether it accomplishes its goal. For many companies, the goal is to simply make the new system work without any problems, though that's not as easy as it sounds, he said. "Just to get the basics correct is the toughest part of the thing," he said.