Supply chain management has always come with a wide range of risks—from capacity issues to operational disruption to inheriting the risks of a supplier. Recently, raw material shortages, climate change, and trade wars have come to the forefront of concerns. Regardless of a company’s size or the proximity of its suppliers, it’s likely to feel the impact of global risks like these. Risk managers are taking note. In Lockton’s 2018 Risk Management Survey, supply risk was among the top issues risk managers wanted to discuss more within their organizations.
As supply chains become more complex, so does the management of related risks. Manual management techniques or legacy technology previously used in performing the job may not work for addressing today’s challenges. “To make the best decisions, managers need access to real-time data about their supply chain, but the limitations of legacy technologies can thwart the goal of end-to-end transparency,” states the Harvard Business Review article The Death of Supply Chain Management.
Using the right technology, risk management teams and supply chain teams can take control. A fully integrated risk management information system (RMIS) with built-in automation and data analytics can help eliminate manual labor, increase efficiency, and allow for more accurate predictions. Ultimately, this can save companies money, and aid in avoiding supply disruptions that could take a business under or severely damage its reputation. (Read more about the far-reaching consequences of reputational damage due to supply chain failures.)
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Organizations often miss a crucial step in their drive to acquire and implement technology as a means to remain competitive. The ability of commercial insurance brokers to leverage data and analytics to bring in new business, write policies, and provide added value to their clients is about more than selecting the best risk management information system (RMIS). To get the most out of the investment in technology and become a digital leader, a brokerage should first assess if essential foundational elements are present.
The next-level broker
A next-level brokerage is a firm that has undergone the process of digital transformation, a term that CIO contributor Mark Edmead defines in Digital Transformation: Why its important to your organization as “the acceleration of business activities, processes, competencies and models to fully leverage the changes and opportunities of digital technologies and their impact in a strategic and prioritized way.”
An anonymously attributed response to the Commercial Property/Casualty Market Index (Q4/2018) survey question, “What opportunities for commercial insurance brokers do you see?” can be also be read as a more specific description of the next-level broker. He or she is able to “maximize use of technologies and analytics to grow business and do so with reduced expenses.” Furthermore, the next-level broker has the “[i]ncreased ability to target growth in select industries via use of data and analytics.” Finally, he or she is able to “[i]dentify new ways via technology and through the use of data and analytics, to solicit, write, and service business.”
Analytics functionality is an essential component in the digital transformation into a next-level brokerage. However, the act of putting a RMIS in place (or modernizing an existing system) doesn’t mean that all expectations around analytics will automatically be met. The right mix of people and data must also be present.
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An analysis of the 2017 Public Entity Employee Safety & Loss Control Survey by Frank Altiere III, RIMS fellow and president of PMA Management Corp., highlights the importance of strategic loss prevention. “Now more than ever, the best strategy is to take a holistic approach to risk management to prevent claims from occurring in the first place with loss control strategies,” he writes. The most successful safety strategies cited in the survey involved employee safety training and improving the safety culture.
While 3 out of 4 survey respondents indicated that they planned to conduct more training, a majority also indicated that their safety programs were either underfunded or significantly underfunded. With that being the case, it’s hardly surprising that respondents listed “Developing strong safety attitudes among managers and supervisors” as the top challenge to workplace safety.
Risk pools to the rescue
Given the desire to improve safety culture through training and the reality of shrinking budgets of members, the services of loss prevention specialists associated with risk pools are especially timely. The ability to deliver training to member organizations that may not be able to otherwise afford it is a tremendous benefit. To truly change a culture, however, it may take more than training. Fostering the engagement of employees will go a long way toward developing the strong safety attitudes members demand.
“A hallmark of a strong safety culture is employees who are engaged in safety and are empowered to advocate for a safe culture,” Altiere notes, citing studies that confirm the dramatic effect engaged employees have on safety incidents. While these benefits are well documented, the steps necessary for actually engaging employees seem far less obvious. “Keep in mind that employee engagement must be earned, and that leadership is critical to engagement,” Altiere warns.
Pairing loss prevention resources with audit technology could be the key to creating engaged employees for your members and fostering sustainable safety cultures that deliver lasting improvement.
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An abundance of data accumulates in the claims management process. And while that data relays critical facts about each claim, that’s not the only insight it can provide. Data, no matter how seemingly unimportant, has the power to unleash valuable insight into your overall claims strategy. As the article Effective Data Discovery Can Be A Difference Maker For A Company’s Long-Term Success says, “Data that you may not even take into consideration can end up giving your company great insight after using proper analytics and data discovery techniques to make sense of it.” The failure to engage in data analytics means your organization may miss out on potentially rich data that sparks innovative strategy.
Benchmarking is one of the most powerful forms of data analytics. Used to measure competitor success and find areas for your organization to improve, benchmarking thrives on an abundance of data. With the right risk management information system (RMIS), you’ll not only be able to seamlessly collect troves of essential data, but also use benchmarking and other data analytics tools to extract meaning from it.
How does benchmarking make your data meaningful?
Data analytics can improve claim outcomes and, in some cases, help to prevent future claims by identifying trends and outliers that may otherwise go unnoticed. Benchmarking, specifically, involves comparing your data and performance against the industry’s best, which helps identify opportunities for improvement and establish long-term goals.
For example, risk managers, insurers, TPAs, and others who work with workers’ comp claims benefit from the annual Workers’ Compensation Benchmarking Study, conducted by Rising Medical Solutions. The study goes beyond merely reporting how claims payers are conducting business and outlines “how organizations turn the challenges identified in the prior studies into solutions and action.” The report’s mission is “to advance claims management in the industry by providing quantitative and qualitative research that identifies what high performing claims payers are doing differently than their peers.”
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