Technology has become ingrained in nearly all aspects of modern society. As it evolves over time, so too do the risks that come with it.
Businesses today need technology to compete with others and advance their product. To calculate the number of risks they may face, risk management professionals need to understand the company from top to bottom. Yet risk management processes are not keeping pace with technology's associated risks, according to a new report by Marsh and RIMS.
The 15th annual Excellence in RIsk Management report delves into risk professionals' knowledge of and role in managing technology innovation such as artificial intelligence (AI), blockchain and the Internet of Things (IoT). Overall, survey respondents did not feel that they have enough knowledge about these disruptive technologies to contribute to discussions about them at a “strategic advisor” level. The findings from the report were released today at the RIMS 2018 Annual Conference & Exhibition.
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|Three technologies impacting insurance and risk management
For risk executives, AI can enhance risk-related insights and decision making. For example, automated analysis of large trends of loss reports can help to identify trends in a manner that would not otherwise be possible. But the survey notes that one key to an AI strategy for managing risks is to first get the data and analytics side of the house in order.
Blockchain has the ability to provide a range of benefits in the risk and insurance ecosystem. It can easily lead to cost reduction, around-the-clock data accessibility and fraud detection. However, only 24% of respondents said their organization either uses or is exploring the technology.
IoT systems allow enterprises to make value-adding decisions in real time, with increased flexibility regarding their approach to efficiency, cost reduction and risk modification. But it's important to acknowledge the possible downsides. IoT increases the loss potential from data security breaches as more sensitive data are being created and stored on networks.
Related: Top cyber risks businesses should prepare for in 2018
|Risk committees continue to be underutilized
One of the ways risk managers can further strategic discussions around technology and innovation is by assuming a leadership role in their organization's cross-function risk committee.
The survey found about 60% of organizations said they have such a committee. Among those who said they do not have such a committee this year, 35% said their company should have one. The collaboration from such a committee can help generate discussion and alignment around everything from innovative uses of data and risk finances to capital expenditures.
The future of insurance and risk management looks promising if AI, blockchain and the IoT can be strategically used. With disruption rapidly becoming the new normal, risk professionals will need updated insights to help them make the best strategic decision possible going forward.
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Denny Jacob
Denny Jacob is an associate editor for NU PropertyCasualty360. Contact him at [email protected].
