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Improving the use of data and analytics is the top priority for risk managers

Risk managers are operating in an environment rich in data that when combined with growing alternative risk solutions can result in more robust risk finance strategies and more resilient organizations, according to a new survey report published by Marsh and RIMS.

However, a general lack of understanding of available alternative risk solutions and effective use of data and analytics are hindering many risk professionals from harnessing the opportunities, the 16th Annual Excellence in Risk Management report found.

According to the report, most risk professionals (47 percent) rank improving the use of data and analytics as their top priority for improving risk management capabilities. Such improvement has ranked as the top priority since the Excellence survey began asking the question in 2013, prompting the question ‘Why isn’t the needle moving?’

At the same time, despite growing interest in a number of alternative risk solutions such as structured risk programs and parametrics, many respondents remain unfamiliar with the concept and what they offer. For example, 33 percent of risk professional respondents and 53 percent of C-suite respondents said they need to learn more about alternative solutions before making a decision whether to use one. Data-driven modeling is thus critical as companies need to compare traditional insurance against alternative solutions to clearly understand the value each provides, the report notes.

“By effectively marshalling data and risk modeling tools, organizations can better understand changes in their risk profiles and risk bearing capacity allowing them to access the opportunities presented by the growing levels of capital available for risk finance,” said Brian Elowe, North American Chief Client Officer, Marsh. 

Carol Fox, Vice President of Strategic Initiatives, RIMS, added: “Expectations for risk management professionals to deliver strategic solutions has never been greater. Now is the opportune time to integrate new technologies for accessing ‘real time’ data to inform business and risk-taking decisions, as well as lead in the development of innovative finance solutions to transfer risk.”

Other highlights from the report include:

  • Financing hard-to-insure exposures was the top benefit of alternative risk solutions cited by survey respondents (38 percent).
  • Cost and explaining the benefits to others in the organization were cited as the two main obstacles to using alternative solutions by 31 percent and 30 percent of respondents, respectively.
  • Risk professionals and C-suite respondents differ on how they think their organization would best benefit from improved use of data and analytics. Risk professionals cited informing decisions on specific risks, while C-suite respondents cited informing the overall business strategy.

The Excellence report, ‘Strategic Risk Finance in the Era of Big Data’, is based on more than 600 responses to an online survey and a series of focus groups with leading risk executives in January and February 2019.

Read the report.



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