Jeff Enzinger, an Origami Risk sales executive, shares his thoughts on the challenges Risk Managers face when collecting exposure values from the field.
Risk Managers embark annually on a daunting and sometimes thankless task of obtaining exposure data from the “field”. Values they seek include data like building replacement costs and other data points critical to the process of obtaining or renewing insurance. A business doesn’t have to be a multi-national enterprise to have dozens or even hundreds of locations that vary in both size and purpose. Field locations like offices, facilities, and warehouses can be spread across the country or the globe.
Risk Managers need an accurate view of values about the facilities to properly insure for losses that may occur. The process for collecting values across the organization can span months in duration and can involve the participation of colleagues outside of Risk Management who happen to have other job responsibilities competing for attention in their day-to-day. The Risk Management department may have one or more full-time resources utilized for months in order to wrangle these values into a single system of record to report to the carrier.
Following are some of the more common challenges that Risk Managers may face when they launch a project to collect values.
Fluid Organization Structure
For many businesses, property purchases and sales are cyclical or tied to an M&A strategy. A company may also lease buildings and equipment that need to be insured against losses for specific periods of time. The Risk Management team may invest a considerable amount of time establishing a location structure and the periods required for insurance.
Exposures Change Over Time
Depending on factors like market demand, regulations, and economic factors, a business may launch new operations or hibernate existing processes at varying facilities. A Risk Manager securing property insurance may prefer to use actual cash value at some older buildings instead of total replacement cost used for newer buildings.
Promotions, Relocations, Turnover, Etc.
The workforce of any company is going to change often. The roles associated with reporting values at a location may change hands one or more times involving back-and-forth communications between Risk Management and each facility (and sometimes Human Resources). To add to the complexity, there may be multiple different people championing different sets of values at the same location (accounting vs facility as an example).
What is the Process for Requesting & Reporting Values?
After having identified the locations, the values, and the personnel to report them, the Risk Management team needs a way to request the values. For some, this is involves the dilemma of copying and pasting emails to each recipient and then asking:
- Do you send a spreadsheet to the field and have them fill it out?
- Or, do you simply request that they reply to the email with the values you’ve asked for.
At the end of the day the Risk Management team still has to manually aggregate all of that data into a single source of truth.
Facilities may perform capital improvements at their locations like building additions or upgrades to costly mechanical systems that need to be properly insured in the event of a loss. Inventory stored at these locations and the workforce powering the facility may also fluctuate. Fleet utilized at a location may be sold off or reassigned. How does a Risk Manager set a threshold for expected variances on reported values? Once a value has been reported with a variance over the prior year’s value, how does the Risk Manager get confirmation that the variance is correct and not an error from fat-fingering? Often this is a manual exercise requiring more back-and-forth emails and phone calls between the Risk Manager and the Field.
Is it Finished?
How would a Risk Manager monitor the overall status of their values collection campaign? Spreadsheets are good for quickly seeing a birds-eye view of gathered data but they aren’t great for notating the circumstances around why certain values are incomplete (like someone being on vacation). Risk Managers are only human so they’ll probably forget and then have to go back through emails and notes to recall.
Automating the Process to Get the Low-Hanging Fruit
Contemporary technology platforms, notably Risk Management Information Systems (RMIS), are designed to handle the complexities faced when organizations collect values. Following are the questions a Risk Manager should consider when evaluating if there is value in moving the values collection process to a RMIS platform:
- Are multiple location structures supported that will map a changing hierarchy?
- Are exposure values assignable by location and by time period?
- HR may already be tracking Supervisory roles by location. Are there capabilities to receive an employee feed from an HR system?
- Will the assignments at each location support a backup assignment if necessary?
- Is there a capability to reassign workloads, bulk assign workloads, or have the recipient reassign her/his own workload?
- Are there email templates that can be crafted to be sent as a group?
- Is there a portal through which values are submitted along with comments and attachments?
- Can the reporting process immediately identify variances from prior values and require the assignee to provide supporting explanations?
- Can the Risk Management team quickly assess the overall completion status of the collection campaign?
Here are 3 Reasons Risk Managers Utilize a RMIS for Values Collection:
- Establish a process that is set up once and replicable in subsequent years provides reductions in the time involved for all affected by the collection campaign.
- Collecting values with a RMIS provides a single-view system of record that can automate other initiatives of the Risk Management practice such as taking premiums issued by the carrier and allocating them back to the locations.
- Automating the values collection process provides another step towards a goal of accurately measuring and ultimately lowering an organization’s total cost of risk.
Jeff’s original post can be found here.