Risk managers can deliver competitive advantage through emerging risk analysis: RIMS

Risk and insurance managers often complain that their partners in the insurance sector are unable to effectively identify, measure manage and transfer their emerging risks fast enough, thus leaving them in an exposed position. But a new report published by RIMS this week appears to suggest that the onus actually lies with risk managers. Risk managers often say that cumbersome and bureaucratic insurers appear unable to tap into the wealth of data available in the modern technology-driven economy, to model difficult risks more swiftly and come to their aid with comprehensive and cost-effective solutions. The insurers for their part argue that this is a two-way street and that they cannot deliver what their customers want and need if they are unable or unwilling to deliver the data to properly analyse the risks. Supply chain is a good example of a critical risk area where a mismatch of data supply and demand is seemingly preventing the development of a potentially very useful and very large insurance market. The recent withdrawal of capacity, reducing limits and application of exclusions in the cyber insurance market, is another example of this problem. RIMS’s report, released at its conference in Boston, argues that if risk managers take the initiative with emerging risks, they can offer serious added value for their organisations, before risk transfer is even considered. “Although they are new and often not well understood, emerging risks can be identified, evaluated and response plans can be implemented, to create a competitive advantage for the organisation,” according to RIMS’ new executive report, titled: Identifying and Evaluating Emerging Risks. RIMS explained that the report explores emerging risk research and discovery processes, evaluation strategies, response planning and steps to integrate emerging risks into the known risk portfolio. It also provides helpful tips to address and overcome expected challenges to enhancing capabilities. The report is authored by members of the RIMS Strategic and Enterprise Risk Management Council: Frank Fiorille, vice-president of risk management, compliance and data analytics, Paychex; Lorie Graham, chief risk officer and senior manager, insurance services, American Agricultural Insurance Co; and, Christy Kaufman, risk analytics and insights director, and chief compliance officer, AmFam Ventures. The society identifies the key takeaways as: By focusing on trends that are just beginning to surface, organisations can identify potential shifts in strategy ahead of competitors Understanding the plausibility of emerging risks will help the organisation determine which risks are most deserving of its limited resources Changes to the organisation’s strategy can create new blindspots The tone in which a risk professional delivers information about an emerging risk to leadership matters While one person might be responsible for strengthening emerging risk capabilities, that person must form a cross-functional team to develop the response plan. The report is currently available exclusively only to RIMS members.

Risk managers can deliver competitive advantage through emerging risk analysis: RIMS

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