Page 31 - Risk Management Bulletin April -June 2021

RMAI BULLETIN APRIL TO JUNE 2021

model, there simply is not the resource to do this model predictions when combined with third-party
manually. insights. ANALYTICS TOOLS will be essential for captives
when reassessing their risk appetite in 2021.
To maintain data integrity, insurance managers need
a modern RISK MANAGEMENT SYSTEM. This can 5. Use data science to reduce claim costs
improve accuracy with online forms, pre-filled values Data science is often forgotten during the risk
and easy-to-use data input tools which enable a management process, yet it can make understanding
simpler data collection process. This can also help an organization’s risk portfolio much easier.
adoption from the field where the data is sourced; we
found many clients starting their process earlier this Data science uses artificial intelligence and machine
year in a bid to secure the best deal, so easy-to-enter learning to put a structure to huge volumes of data,
information and high adoption levels were key. remove bias and highlight where risk managers should
probe more.
A dashboard will give risk and insurance managers an
overview of key information, and analytics and custom Until recently, data science has typically required
reporting can quickly pull out the data needed for experienced data scientists to make sense of it. With
INSURANCE RENEWALS. a modern data science solution, data can be

interrogated by inputting conversational language –
If insurance managers can give their brokers and the making it suitable for general users.
markets comprehensive and accurate information
quickly, they will have better bargaining power during
All users, regardless of their experience with AI, can
the renewal process. This should give the business
better terms, and premiums will reflect actual risk, now quickly discover insights, identify patterns,
which can often mean significant cost savings. generate risk predictions based on a huge range of
data sources and benchmark their data against that of
4. Use good data to manage risk appetite their peers. This can be used to identify the potential
frequency and severity of different types of claims
As well as negotiating better renewal terms, businesses
will also be reassessing their risk appetite and which can be used to focus resources on reducing the
considering alternative insurance options. impact.

The A.M. BEST MARKET SEGMENT REPORT found that The beauty of all this is that AI can adapt as technology
European captives have proved resilient to the improves, or when new streams of data are available.
pandemic. The hard insurance market has opened up Moving forward, risk managers who harness the
opportunities for captives, with the expectation of new power of AI and data science can gain a better
formations and an increase in usage for existing. understanding of their risk portfolio and drive optimal
outcomes.
Captives need to TAKE OWNERSHIP OF THEIR DATA to
understand what risks they want to carry and those As we look ahead to 2021, risk managers can provide
that they will put to the insurance market. Good data even more value to their organizations by mitigating
and analytics are both vital for this. supply chain risks, building resilience, using innovative
technology, improving data integrity and leveraging AI
Meaningful analytics can help identify trends, and even and data science. (Source : Ventiv Technology)

Risk Capacity
In enterprise risk management terms, risk capacity usually refers to the total amount of risk that organization
can bear without imperilling it critical objectives or corporate viability. This is typically an amount higher
than the upper risk thresholds that are set within the risk appetite framework. Risk capacity can be both
quantitative and qualitative and is often used to describe financial thresholds e.g. the maximum financial
loss in dollar terms that can be absorbed or the maximum capital that can be exposed.

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