Risk managers missing out on big data opportunitiesReprints
The market may still not be ready for all the sophisticated functionalities that technology companies have to offer risk managers, a Business Insurance survey concludes.
According to Business Insurance's Risk Management Insights Panel, which comprises risk managers in industries that include construction, transportation, real estate and health care, 97% are the final decision-makers or actively participate in their organization's insurance purchases.
The online survey, which drew 184 responses, found that 65% of respondents are light to moderate users of risk management information systems. Twenty-eight percent say they do not use RMIS at their company at all.
Risk management professionals also are not jumping on the big data bandwagon, as only 5% of survey respondents said they currently use big data in their modeling efforts.
About one-fifth of the total still rely on spreadsheets.
Amid cyber breaches, geopolitical problems around the world and financial market turmoil, 69% do feel that risk management today is a higher priority in their organization than it was two years ago.
The top five risks about which their organizations are most concerned are operational, regulatory, legal, data/cyber and reputational risks, according to the survey.
For the 72% of risk managers that do have RMIS, managing and monitoring workers compensation claims is the top thing that today's technology allows that was not available in the past.
Managing risk and insurance, producing detailed internal reports, capturing and analyzing risk data and improving risk analysis round out the top five uses of RMIS by today's risk managers. That is nearly the same as Business Insurance's previous risk manager survey in 2014.
But when it comes to challenges the risk managers expect to face in the next 12 to 24 months, collecting and analyzing data is not the biggest issue.
Members of the Risk Management Insights Panel say their three biggest concerns in the next two years are getting business units to collaborate on risk management initiatives, developing a risk culture within the organization and aligning their tolerance of risk with the company's overall business strategy.
Improving risk measurement, forecasting and modeling is No. 4 among their future concerns, while No. 5 is making risk management a key priority for executive leadership.
As far as RMIS and other technology, risk managers' top desire is that it be able to forecast risks, followed by relating risks and processes, conducting risk and other business analysis, quantifying risks and risk assessments.
That means risk technology companies may want to increase the sophistication and functionality of their offerings, but also put equal emphasis on making their systems easier to use, considering the time lag in risk management's adoption of new technology.
That could help with companies' generally flat spending on new tech tools.
Sixty-five percent of the respondents said there has been no increase in technology investment in the past year. Still, the 33% that did increase technology spending in the past year said it increased by 10% to more than 50%.
The average spending on new technology in the past year was $129,000, but 70% said their company spent less than $100,000 on risk management software.
No one RMIS provider dominates the market.
One-third of the risk managers said they did not receive any training when new technology was adopted, but the survey was of senior executives with an average age of 53.2, who may not use the technology every day.
The Jan. 12-27 survey has a 95% confidence level.