Atlanta, GA – As they look for efficient ways to manage an expanding and increasingly complex array of exposures, many risk professionals now are taking advantage of new technology-based solutions that facilitate holistic approaches to risk management that go beyond what’s traditionally been covered by their insurance programs.
A new survey of 1,005 users of risk management information systems (RMIS) and similar platforms, finds applications that facilitate integrated risk management (IRM) gaining popularity. The survey – part of Redhand Advisors’ 2023 RMIS Report – also found more risk professionals now use their RMIS to manage non-traditional exposures, such as operational risk (61%), compliance (46%), strategic (32%), and third-party (31%) risks.
“Unfortunately, even with the end of the COVID-19 emergency, the global risk environment remains elevated,” said Patrick O’Neill, founder and president, Redhand Advisors. “Employers still face significant and evolving cyber-related threats, worker shortages, hard commercial insurance conditions, economic uncertainty, inflation, increasing risk from natural disasters, among other challenges. And they’re increasingly turning to risk technology for answers.”
Meanwhile, the survey found RMIS vendors are continuing to expand their capabilities beyond traditional solution sets to include new applications for governance, risk, and compliance (GRC), and environmental, health, and safety (EHS).
As they widen their utilization of risk technology, survey participants also are increasing their budgets. Of those surveyed, 75% expect their annual expenditure on risk technology to increase about 12% on average in 2023 — 50% higher than the 8% increase reported last year.
The survey found that enterprises with less than $500 million in revenue are implementing a RMIS at a faster rate than those in any other size band as smaller organizations recognize the value of risk management, invest in related technology, and costs for systems come down.
Even as technology continues to evolve, there are opportunities to drive improvements in risk analytics, including wider application of artificial intelligence (AI) and machine learning (ML).
Indeed, in managing an expanding and increasingly complex array of risks, employers have been leveraging their RMIS to collect loss and exposure data, a critical component of effective risk management. However, the survey found they are less able to use their systems for analytics needed to drive meaningful improvements across multiple areas currently or potentially addressed by risk management.
When asked to rate their use of data and analytics in managing risk, only 46% of the survey participants indicated they’re “very” or “extremely” effective with analytics, a low bar compared with their performance with other system capabilities.
“This is a troubling finding for risk professionals and RMIS providers, alike, which may be explained by such factors as a lack of data quality, governance, and internal analytic expertise among system users,” O’Neill observed. “In addition, many enterprises are struggling to integrate data analytics into their business processes, which also leads to suboptimal outcomes.”
To ramp up their efforts, some survey participants indicated they are actively seeking new partners that offer more advanced analytics solutions. Accordingly, many plan to adopt big data analytics, AI, and ML within the next three years.
“Even though their planning may be headed in the right direction, risk professionals need to take appropriate steps internally to apply these capabilities effectively,” said O’Neill. “That may mean improving their data quality and governance, engaging skilled data analysts, breaking down silos and collaborating across disciplines to integrate data analytics into their business processes.
“At the same time, some technology vendors need to sharpen their focus on providing more advanced analytics capabilities and insights that truly add value to their clients and deliver the support needed to help them get the most from these tools,” O’Neill added.
The survey also found the industry is evolving. Nearly one in three survey participants implemented their system within the past three years, perhaps signaling they have either adopted a RMIS for the first time or are upgrading their vendor or system.
Now in its sixth year, The RMIS Report is the industry’s most widely read annual guide to the risk management information system industry, downloaded each year by more than 2,000 risk management professionals. In addition to the survey of 1,005 individual risk professionals, the report’s findings are based on responses to detailed questionnaire completed and submitted by 32 leading RMIS and RiskTech vendors, as well as anecdotal evidence and expertise and perspectives of the report’s co-authors, Patrick O’Neill and David Tweedy. Copies of the 2023 RMIS Report are available free of charge by contacting info@rmisreport.com or by visiting www.rmisreport.com.
Source: Redhand Advisors