As technology and the field of risk management continue to advance, the word “data” has seen an increase in popularity. Usage of phrases such as “data analytics” and “big data” is surging in the industry, but many professionals have yet to fully understand the importance of data in managing risks to their organizations.
According to Steve Rhee (pictured), chief digital officer of Arthur J. Gallagher & Co., data is “tremendously important” in helping organizations make powerful decisions, especially in the field of risk management.
Put simply, Rhee defines risk management as “knowing the total cost of risk and how to use your capital effectively to best protect your organization.”
As such, it is important to understand data, which is a key driver in making decisions that affect the company and its employees, brand, and customers.
“Having the right data, at the right time, with the right perspective on that data helps you make confident decisions in the best interest of clients, employees, and the organization,” Rhee told Insurance Business.
“Data helps risk managers identify trends occurring in their geography or the industry, as well as any emerging risks to make an educated and well-informed decision on how to structure their risk programs.”
Rhee highlighted two main data points organizations should look at:
The COVID-19 pandemic had an immediate impact on every industry and municipality, and forced companies to look at their risk profiles differently going forward.
Risk managers should look at how the pandemic will impact the future of their programs – such as how it affects your employees, supply chains, and what other potential risks have emerged. The global impact of the pandemic can highlight risks like failure or delay in delivering products, increase in cyber threats, and employee safety. Organizations should identify programs to best protect their people and their operations.
How to make complex data simple?
According to Rhee, making data simple starts with knowing how and where to get the appropriate data and looking at the relevant data points that can influence outcomes.
Take natural catastrophes, for example. Important data points include location and historical data, such as frequency, magnitude, and incurred losses. Risk managers look at these basic data points and try to find a correlation or relationship between them.
“People tend to look at data points independently, but Gallagher Drive pulls all that data together and simplifies it into a single, comprehensive view” he said.
Gallagher Drive, according to Rhee, is a data and analytics platform that gives a forecast for an event (such as a hurricane) and shows historic losses, loss projections, as well as the insurance options risk managers can take. It also provides benchmarks about the insurance bought by industry peers and other businesses in the same geography.
“Having the right data, at the right time and the right broker who can analyze that data for you to make the right decision is where Gallagher Drive distinguishes itself from competitors,” he said.
