It’s not an exaggeration to say that risk managers are inundated with data.
The annual values collection process alone can mean gathering information from spreadsheets, emails, and multiple other documents — and then you still must analyze and provide that information to brokers. The process is headache-inducing and inefficient, but it doesn’t have to be.
If this sounds familiar, a risk management information system (RMIS) is the solution.
WHAT IS A RMIS?
A RMIS is a technology solution designed to manage and coordinate an organization’s risk and insurance-related information. A RMIS also serves as a centralized platform for risk managers to collect, store, analyze, and report on data related to their business risk and insurance coverage.
Organizations use RMIS systems in a variety of ways, with claims management and claims administration the most common uses. This according to the responses — published by risktech consulting firm Redhand Advisors in their 2023 RMIS Report — of more than 1,000 risk professionals to the annual RMIS Report User Survey. Incident entry/management, insurance renewal data collection, and policy/program management were also highly cited.
Here’s how organizations use RMIS technology for some of these processes:
- Managing and administering claims. A RMIS streamlines the claims management process by providing a single source of truth to record, track, and analyze all insurance claims. It helps promptly report incidents, facilitates communication with insurers, and expedites the claims settlement process.
- Managing policies and renewals. A RMIS simplifies and centralizes all insurance policy information, renewal dates, coverage details, and premiums. This helps risk managers ensure appropriate coverage, avoid gaps and lapses, and negotiate better terms with insurers.
- Streamlining incident intake and management. A RMIS simplifies incident reporting and investigation processes by offering a standardized and structured method to record incidents. It facilitates the collection of essential information, enabling thorough investigations and the implementation of corrective actions.
- Improving reporting and reducing manual, administrative tasks. Through dashboards, updated in real time, an organization can organize their data, allowing for faster and more efficient reporting. A RMIS can also be used to cut down on manual tasks such as data entry or report generation and distribution, freeing up time for risk managers to focus on strategic risk initiatives.
RMIS VS. SPREADSHEETS: HOW DO THEY SHAKEOUT?
While the use of spreadsheets to manage risk and insurance information may make sense for smaller organizations, spreadsheets have inherent limitations. As the 2023 RMIS Report points out, as many as 43% of organizations say they rely too much on spreadsheets to track their risk and insurance information.
What are the limitations of spreadsheets?
If your business has multiple departments with data stored across systems, collecting data in spreadsheets can be incredibly inefficient. It involves significant time spent copying and pasting, and when there is a lot of data to manually input and contend with, you’ll likely find lags in your reporting processes.
With all that manual keying into spreadsheets, there is also an increased likelihood that an error will occur. In fact, according to the article The risks of using spreadsheets for statistical analysis, 88% of all spreadsheets contain at least one error. One small mistake can do more harm than you think, as errors are often intensified as the spreadsheet is shared and edited again and again. Spreadsheets also lack an audit trail. As a result, it can be difficult to identify the origin point of errors so that issues can be corrected.
Spreadsheets also have data limitations. For example, as your business grows, you may run into roadblocks using them for complex calculations. As an organization expands and its risk management needs evolve, a RMIS can easily scale to accommodate increased data volumes and complexity.
Spreadsheets can also restrict real-time collaboration with stakeholders as they don’t offer a single point of truth from which everyone can work. Effective communication and collaboration with insurers, brokers, and internal teams — to name a few — is crucial for successful risk management. A RMIS facilitates seamless communication and information sharing, improving collaboration among stakeholders.
It’s clear spreadsheets have their disadvantages, but how do you know when it’s the right time to switch to a RMIS solution? Deciding whether your organization needs advanced risk management and claims administration software depends on a few factors, including:
- the complexity of your risk exposures
- how much time you spend manually managing processes
- the structure of your business and its data
Ultimately, organizations must consider the speed and precision with which they can navigate through their risk, claims, and insurance procedures to determine if they are ready for a more advanced solution.
GAUGING YOUR RETURN ON INVESTMENT (ROI): A FIRST STEP IN DETERMINING RMIS USEFULNESS
The return on an organization’s investment in RMIS technology varies, though according to the 2023 RMIS Report it’s often recaptured in 18 months. There are also intangible aspects of implementing new tech that become clear more quickly, such as easing the frustration of performing manual tasks and freeing up risk managers to do more valuable work.
Evaluating the effectiveness of a RMIS involves assessing its performance and impact on an organization’s risk management processes overall. Businesses that have implemented a RMIS note better reporting, improved data accuracy, and increased productivity. In fact, 41% of organizations responding to the 2023 RMIS Report User Survey rated their RMIS as “very effective,” while 29% measured their RMIS as “extremely effective.
To learn more about maximizing the return your risk, compliance, and safety software investment, view our on-demand webinar.
3 FEATURES TO LOOK FOR IN A RMIS
If a RMIS is the right investment for your organization, the journey of choosing a vendor begins. There are several factors to evaluate. A few of the most important include:
- Adaptability/Flexibility. A crucial factor to examine is whether the RMIS can be adapted to meet your company’s needs or if you will have to conform to the system. Are there workflows that need to be replicated in the new system? Do you have specific data field requirements the system must be able to handle? Look for a system that can be as easily integrated into your specific business as possible.
- Scalability/Efficiency. You have decided you want to move forward with purchasing a RMIS. But what happens when your business needs evolve or your team’s role in the organization expands? Ask potential vendors about any additional expenses that may arise as your business scales before you choose one.
- Usability/Reporting. Your decision to move to a RMIS carries much less meaning if the system is difficult to adopt. After all, tools only work if they are being used. This extends to the reporting capabilities the system offers.
THERE’S NO MAGIC HERE. INSTEAD, OPTIMIZE YOUR RMIS FOR VALUE.
A RMIS is an advanced piece of technology, but it’s not magic.
To get the best value out of a RMIS investment, it’s important to rethink risk management practices before you implement the system so you’re not replicating inefficiencies. It’s also crucial to fully train your staff, integrate the RMIS into internal and external systems, and stay up to date on the system’s upgrades and new features. Ultimately, businesses need to put time and effort into optimizing any new system; a RMIS is no different.
Advanced technology solutions have transformed risk management practices, providing organizations with streamlined data processes, data-driven decision-making, and improved risk reduction strategies. Embracing these solutions empower risk managers to enhance efficiency, make informed choices, and contribute to the overall success of their organizations.
To determine if a RMIS might be right for your organization and learn more about RMIS solutions from Origami Risk, contact us.