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A data-rich environment and growing alternative risk solutions are giving risk managers the opportunity to create more robust risk finance strategies, according to a new report published by Marsh and RIMS. However, a lack of understanding of those solutions and ineffective use of available data are hindering many risk managers from taking advantage of those opportunities.
Forty-seven percent (47%) of risk professionals say improving the use of data and analytics is their top priority for improving risk management capabilities, according to the Excellence in Risk Management report.
“Such improvement has ranked as the top priority since the Excellence survey began asking the question in 2013, prompting one to wonder: ‘Why isn’t the needle moving?’” Marsh said in a news release.
The report also found that despite growing interest in alternative risk solutions like structured risk programs and parametrics, many risk professionals aren’t familiar with the concept. Thirty-three per cent (33%) of risk professional respondents and 53% of C-suite respondents said they needed to learn more about alternative risk solutions before deciding whether to use one. Marsh said that data-driven modeling was critical in letting companies compare traditional insurance against alternative solutions.
“By effectively marshalling data and risk-modeling tools, organizations can better understand changes in their risk profiles and risk-bearing capacity, allowing them to access the opportunities presented by the growing levels of capital avoidance for risk finance,” said Brian Flowe, North American chief client officer for Marsh.
“Expectations for risk management professionals to deliver strategic solutions has never been greater,” said Carol Fox, vice president of strategic initiatives for RIMS. “Now is the opportune time to integrate new technologies for assessing real-time data to inform business and risk-taking decisions, as well as lead in the development of innovative finance solutions to transfer risk.”
