Risk Management Information Systems are a necessary part of any risk mature organisation but what are they and where do they add value?

Organisations already hold a great deal of data which could enhance their risk management strategies, but this is often not fully realised or maximised. Policy limits, locations insured, incidents recorded, operational downtime, claims types, costs, and more all provide a rich and invaluable picture of an organisation’s risk profile. This information can then be measured and used to reduce the total cost of risk.

Data is often held in spreadsheets, email attachments or servers, meaning that risk data used to support insurance coverage and placement is inaccurate, difficult to access or manipulate. Additionally, it may be out of date, or difficult to interpret and compare across time periods to identify errors and omissions. If colleagues find it difficult to engage with your risk and insurance strategy it could be that your reporting is not helping them understand the underlying story that the data is telling. Even worse, in the event of a loss the claim may be not paid in full or even not paid at all – so the importance of clear and robust data should not be under-estimated.

What is a Risk Management Information System?

A Risk Management Information System (RMIS) is an integrated computer information system used to aggregate risk data and to help decision makers evaluate business risks, and is a must for risk-mature organisations.

Too often organisations do not maximise the benefit of risk management because data is stored in spreadsheets, emails, or documents on servers. Increasingly colleagues want decisions to be data-driven and made quickly. If you do not use a RMIS or your current RMIS does not meet your needs, you should consider what you need and how your data can be used to support your risk strategy.

Benefits of using an RMIS?

The benefits to companies of all sizes in the proactive and company-wide engagement and deployment of a RMIS are:

  • Better risk data which could improve the number and type of claims and therefore the potential for lower premiums [the RMIS pays for itself]
  • Consolidation and/ or customisation of insurance coverages
  • Development of an Enterprise Risk Management approach to contingency planning
  • A single version of the truth – robust data controls
  • Identification critical risk exposures
  • Reduction of exposure to “human error”
  • Organisation-wide stakeholder management and information exchange

What are your needs?

Risk mature organisations of all sizes are increasingly investing in RMIS, but with a lot of choice in the market it is important to define your needs before considering the options. This will enable you to invest in a system which meets your current requirements and can be enhanced to future-proof your developing or growing business. Critical features which should be considered include:

  • The ability to visualise key risk indicators such as claims numbers, claims per policy, claims paid, reserve movements and open incidents
  • The ability to store current and historical policy documents, to allow easy access to renewal dates, policy limits, premiums, self-insured values, as well as being able to analyse changes in historical values
  • Details of all exposure information and locations covered by policies, which would include sums insured, vehicle and employee numbers, turnover, gross profit, current risk controls and values
  • The ability to make improvements by tracking incidents and investigations to help with root cause analysis and lessons learnt
  • The ability to quickly compare current claims or incident performance with previous years
  • The ability to access other risk management information you hold, such as enterprise risk or health and safety management

As with any system an intuitive, clear, and easy to use interface is essential. Few people enjoy data manipulation from multiple sources, therefore having intuitive, visually appealing dashboards that summarise key information is important. This will help when it comes to reporting, and engaging colleagues with the information you are providing to highlight successes, agree on improvements, and drive action.

Why use a RMIS?

One customer had outgrown their risk management ‘systems’, which consisted of a variety of applications, spreadsheets, and documents to manage risk. Each business unit defined and categorised risk in its own way. The lack of consistency made it impossible to consolidate risk data across the organisation.

Issues:
– Inconsistencies in risk definitions and categorisation
– Impossible to consolidate risk data from multiple systems
– No access to real-time information
– Difficulties in creating timely and accurate reports

Solutions:
– A single source of truth for all risk data
-An improved user experience
-Centralise risk data across all locations

Results:
– The company can now visualise the relationships between risks, mitigations, and key indicators, which has improved decision-making
– Reports that previously took weeks to pull together can now be created with just a few clicks – and with real-time data
– By streamlining and automating processes and reporting, they have been able to redirect one full-time employee to strategic tasks that add much more value to the organisation.

We are here to help
If you are concerned about how this affects you and your business and would like support in assessing your needs, we are here to help. Please do get in touch for confidential advice and guidance.

This article was adapted from an article by Zurich which can be found here.