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The Revolution of Enterprise Risk Management for the Insurance Industry


The Revolution of Enterprise Risk Management for the Insurance Industry

Advances in technology have led to increased efficiency across the enterprise. But with increased data speed and communication and business growth comes increased risk for both enterprise-level organizations and small businesses. Data must be kept secure as it moves across the digital space. Digital communications must be safeguarded. Outsourced industries and specialties must be vetted before being entrusted with proprietary information or client data.


Non-traditional insurance organizations have been able to thrive in this rapidly paced environment thanks to captive insurance software. Cloud-based software is continuously updated to keep up with shifting regulations across a range of locations and geographies, all while keeping client policies up-to-date and agents informed in real-time. But these developments are only a portion of a much larger enterprise risk management revolution occurring throughout the insurance industry. Here are a few others.


Re-Inventing the Risk Assessment Process


Traditional risk assessment processes were linear, with agents and employees checking off compliance measures and actuarial professionals dissecting the past to predict the future. The speed of the industry and the availability of new information have changed this structure into one that is recursive and dynamic.


A re-invented risk assessment process reflects an overall change in culture, one that is operation-focused. Operation-focused insurance organizations are led by a chief risk officer who oversees decision-making and curates business value. Through risk-informed decisions, an enterprise gains business value in the form of secure investors, improved regulatory compliance and a pro-active risk culture.


Pro-Active Risk Assessment


Risk assessment is both forward and backward facing. This might sound counter-intuitive but it is a practical stance in today’s shifting culture. One example is the captive insurance industry. Looking backward, risk assessors gain insights about types of risk. From cyber threats to environmental considerations and traditional risk factors to the impacts these risks types have made on business value, the backward view is essential but gains more power when combined with a forward-looking perspective.


Looking forward, risk managers establish a vantage point of forthcoming risks across the business ecosystem. Captive insurance software programs ensure that decisions are enacted uniformly across third parties as well as throughout the enterprise. As new technologies develop, a forward-looking view predicts the impacts new threats may have on business value. With this information, risk managers are able to establish team roles and develop the infrastructure needed to mitigate future risk. This operations approach embeds risk management throughout the entire enterprise.


Business Value Gains


As the enterprise becomes buttressed against risk, business value grows. No business is without risk, but determining which risks are worthwhile and which should be avoided enables solid decision-making and transparency with stakeholders. These features improve business value in the long term.